Jones and Company have recently issued a bond with a face value of $1.000, 30 years to maturity and a semi-annually paid coupon rate of 5%. If the Jones & Co. bond is trading for $1.040, what is the yield on the bond? Round your answer to the nearest basis point.

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.