Malko Enterprises' bonds currently sell for $1,050.They have a 6-year maturity,an annual coupon of $75,and a par value of $1,000.What is their current yield?

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the current market price of the bond. The annual coupon payment is $75, and the current market price is $1,050. So, the current yield is $75 / $1,050 = 0.0714 or 7.14%.

Malko Enterprises' Bonds Currently Sell for $1,050