Barkstone Candies bonds have a face value of $1,000 and a current market price of $1,047.20. The bonds have a 6% coupon rate. What is the current yield on these bonds?

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual coupon payment by the current market price of the bond. The annual coupon payment is 6% of the $1,000 face value, which is $60. The current market price is $1,047.20. Therefore, the current yield is $60 / $1,047.20 = 0.0573 or 5.73%.

Barkstone Candies Bonds Have a Face Value of $1,000 and a Current