A bond has a face value of $1,200, a price of $1,500, and coupon payments of $300 for two years. The "current yield" of this bond is:

Name: A bond has a face value of $1,200, a price of $1,500, and coupon payments of $300 for two years. The "current yield" of this bond is:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the bond's current price. Here, the annual coupon payment is $300, and the bond's price is $1,500. So, the current yield is $300 / $1,500 = 0.20 or 20%.

A Bond Has a Face Value of $1,200, a Price