Harry owns a bond with a par value of $1,500 and a coupon rate of 7 percent in the Cheryl Shipping Corporation. If the current market price of the bond is $1,000, then the current yield would be _____.

Question

Quizplus · Accepted Answer

Current yield is calculated as annual interest payment/market price. 
In this case, the annual interest payment is 7% of $1,500 = $105. 
Therefore, current yield = $105/$1,000 = 10.5%.

Harry Owns a Bond with a Par Value of $1,500