Garvin Enterprises' bonds currently sell for $1,150.They have a 6-year maturity,an annual coupon of $85,and a par value of $1,000.What is their current yield?

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the current market price of the bond. Here, the annual coupon payment is $85, and the current market price is $1,150. So, the current yield is $85 / $1,150 = 0.0739 or 7.39%.

Garvin Enterprises' Bonds Currently Sell for $1,150