A coupon bond pays annual interest, has a par value of $1,000, matures in four years, has a coupon rate of 8.25%, and has a yield to maturity of 8.64%. The current yield on this bond is

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The current yield is the annual coupon payment divided by the current market price of the bond. The annual coupon payment is $1,000 * 8.25% = $82.50. The current market price of the bond can be found using the bond pricing formula:```Bond Price = (C / r) * (1 - 1 / (1 + r)^n) + (FV / (1 + r)^n)```where:* C is the annual coupon payment* r is the yield to maturity* n is the number of years to maturity* FV is the par value of the bondPlugging in the values we know, we get:```Bond Price = (82.50 / 0.0864) * (1 - 1 / (1 + 0.0864)^4) + (1000 / (1 + 0.0864)^4)= $952.38```Therefore, the current yield is:```Current Yield = (82.50 / 952.38) * 100%= 8.64%```

A Coupon Bond Pays Annual Interest, Has a Par Value