Garvin Enterprises' bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield?

Name: Garvin Enterprises' bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield ?
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Question

Quizplus · Accepted Answer

The current yield is the annual coupon payment divided by the current market price of the bond. In this case, the current yield is $85/$1,150 = 7.39%.

Garvin Enterprises' Bonds Currently Sell for $1,150