You paid $1,069 for a corporate bond that has a 7.03% coupon rate. What is the...

You paid $1,069 for a corporate bond that has a 7.03% coupon rate. What is the current yield?

Assume par value = $1,000

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Solutions

Expert Solution

Amount of annual interest = Face value × Interest rate = $1,000 × 0.0703 = $70.3

Current yield = Annual interest amount / Current price

Current yield = $70.3 / $1,069

Current yield = 0.0658 or 6.58%

jeff jeffy answered 2 years ago

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