A coupon bond pays annual interest, has a par value of $1,000, matures in four years, has a coupon rate of 10%, and has a yield to maturity of 12%.The current yield on this bond is

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The current yield is calculated as the annual coupon payment divided by the current market price of the bond. The annual coupon payment is $100 (10% of $1,000). The bond's price is less than $1,000 because the yield to maturity (12%) is higher than the coupon rate (10%). The current yield is approximately 10.65%.

A Coupon Bond Pays Annual Interest, Has a Par Value