Question

A bond has a coupon rate of 8.2 percent, a $1,000 par value, matures in 11 years, has a yield to maturity of 7.67 percent, and pays interest annually. What is the current yield

Answer 1

Answer:

a. 7.89%

Explanation:

Options includes "A. 7.89% , B. 8.21% , C. 8.43% , D. 7.67% , E. 8.52%"

Face value = -1000

PMT = -8.2%

n = 11.5

Market rate = 7.67%

Bond value = PV(7.76%, 11.5, -8.2%, -1000)

Bond value = $1.039.56

Current yield = 82/1,039.56

Current yield = 0.0788795259532879

Current yield = 7.89%