A bond with a coupon rate of 10%,a market price of $800,and a face value of $1,000 has a current yield of 12.5%.

Name: A bond with a coupon rate of 10%,a market price of $800,and a face value of $1,000 has a current yield of 12.5%.
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Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual interest payments (coupon rate x face value) by the market price of the bond.

Current yield = (10% x $1,000) / $800 = 0.125 or 12.5%

Therefore, the statement is true.

A Bond with a Coupon Rate of 10%,a Market Price