Ajax Corp. has a bond with a coupon rate of 12%, maturing in 15 years at $1,000 per bond. The current market price is $960. What is the current yield?

Question

Quizplus · Accepted Answer

Current yield is calculated as the annual interest payment (coupon rate x face value) divided by the current market price. 
Annual interest payment = 0.12 x $1,000 = $120
Current yield = ($120/$960) x 100% = 12.5%
Therefore, the closest answer among the given options is B, which is 12.6%.

Ajax Corp Has a Bond with a Coupon Rate of 12