The outstanding bonds of Jacksen Global Freight carry an 8% coupon and have a current market price of $1,054. These semiannual bonds mature in 20 years and have a face value of $1,000. What
Is the current annual yield on these bonds?

Question

Quizplus · Accepted Answer

The current annual yield is calculated as the annual coupon payment divided by the current market price. The annual coupon payment is 8% of the face value, which is $80. The current market price is $1,054. Thus, the current annual yield is ($80 / $1,054) * 100 = 7.48%.

The Outstanding Bonds of Jacksen Global Freight Carry an 8