Question

In: Finance

Assume you have a bond with a​ semi-annual interest payment of ​$50​, a par value of​...

Assume you have a bond with a​ semi-annual interest payment of ​$50​, a par value of​ $1,000​, and a current market price of ​$770. What is the current yield of the​ bond?

Solutions

Expert Solution

Annual interest payment = 50 * 2 = 100

Current yield = (Annual coupon / price) * 100

Current yield = (100 / 770) * 100

Current yield = 12.99%


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