Answer:
6.21%
Explanation:
Discount of the bond can be calculated by subtracting the purchase price of the bond from the face value. Discount Yield is the ratio of discount on the bond to the future value of the bond.
Discount Yield = [(F - P)/F] x [360/t]
Where
F = Face Value = $1,000 ( assumed)
P = Present value = $1,000 x 97.5% = $975
t = 145 days
Placing the value in the formula
Discount Yield = [($1,000 - $975)/$1,000] x [360/145] = 0.0621 = 6.21%
