Paul Oldy just purchased a $2,000 face value bond with. The bond pays $45 in interest semiannually. Paul could sell the bond today for $2,050. The current yield on this bond is __________ percent.
A) 2.25
B) 2.20
C) 4.50
D) 4.39

Question

Quizplus · Accepted Answer

To calculate the current yield, we divide the annual interest payment by the current market price of the bond:

Annual interest payment = 2 * $45 = $90
Current yield = ($90 / $2,050) x 100% = 4.39%

Therefore, the answer is D) 4.39%.

Paul Oldy Just Purchased a $2,000 Face Value Bond With the Bond