ND Electric Company issued $1,000 bonds that have an annual coupon rate of 6.5%.The present market value of the bonds is $1,225.If the bonds have 17 years remaining until maturity,what is the current yield on ND Electric Company bonds?

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual interest payment by the bond's current market price. Here, the annual interest payment is 6.5% of $1,000, which is $65. The bond's current market price is $1,225. So, the current yield = ($65 / $1,225) * 100% = 5.3%.

ND Electric Company Issued $1,000 Bonds That Have an Annual