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Scilla [17]
3 years ago
9

What is the current yield on a zero coupon bond with a remaining life of 4 years, a yield to maturity of 10.8%, and a par value

of $1000
Business
1 answer:
Tanya [424]3 years ago
8 0

Answer:

$663.5

Explanation:

given that

number of years remaining = 4 years

yield to maturity ratio = 10.8% = 1.108

Par value = $1000

Current yield takes a look at the current price of a bond, instead of looking at it from a face value. That being said, it can be calculated mathematically as

Current yield = 1000 / 1.108^4

Current yield = 1000 / 1.507

Current yield = $663.5

Therefore, the current yield from the question we are given, is found to be $663.5.

I hope that helps

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