Answer:
Current yield = 5.46%
Step-by-step explanation:
Current yield is calculated by dividing the annual income (coupon) on the bond divided by the current price of the bond
Current yield = Annual coupon / Current price
In this case,
Face value or Par value = $7,600
Price of the bond = $7,373 (shows it is a discount bond since the price < FV)
Coupon rate = 5.30%
Next, calculate the Coupon payment in dollars;
Annual coupon PMT = Coupon rate * Face value
Annual coupon PMT = 0.053 * 7,600 = $402.8
Therefore, Current Yield = 402.8 / 7,373 = 0.05463
Current yield = 5.46%
