A 5.5% coupon bond has a face value of $1,000 and a current yield of 5.64%. What is the current market price?

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the market price. Given a current yield of 5.64% and an annual coupon payment of 5.5% of $1,000 (which is $55), we can set up the equation: $55 / Market Price = 0.0564. Solving for the Market Price gives us $55 / 0.0564 = $975.18.

A 55% Coupon Bond Has a Face Value of $1,000 and and a Current