A bond with a market value of $1,000 and a coupon rate of 7.0% has a 7.0% current yield.

Name: A bond with a market value of $1,000 and a coupon rate of 7.0% has a 7.0% current yield.
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Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual coupon payment by the market value of the bond. In this case, the annual coupon payment is 7.0% of $1,000, or $70. Dividing $70 by the market value of $1,000 gives a current yield of 7.0%. Therefore, the statement is true.

A Bond with a Market Value of $1,000 and a Coupon