A bond that pays interest semiannually has a price of $975.11 and a semiannual coupon payment of $28.25. If the par value is $1,

Question

3 years ago

5

000, what is the current yield

1 answer:

Roman55 [17] · Answer 1 · 2022-06-12T17:59:45+03:00

Answer:

5.79%

Explanation:

For the computation of current yield first we need to find the annual coupon is shown below:-

Annual Coupon = Coupon payment × Semi annual

= $28.25 × 2

= $56.5

Current Yield = Annual Coupon ÷ Market Price

= $56.5 ÷ $975.11

= 0.0579

or

= 5.79%

Therefore for computing the current yield we simply applied the above formula so that the correct rate could come