What is the current yield of a bond with a 6% coupon, 4 years until maturity, and a price quote of 84?

Question

Quizplus · Accepted Answer

The current yield of a bond is calculated by dividing the annual coupon payment by the bond's current price. Here, the annual coupon payment is 6% of the bond's par value, which is typically $1000, so the payment is $60. With a price quote of 84, the bond's current price is 84% of its par value, or $840. Therefore, the current yield = ($60 / $840) * 100 = 7.14%, not 11.18%. My initial calculation was incorrect; the correct calculation shows that none of the provided options accurately reflect the correct current yield based on the given information.

What Is the Current Yield of a Bond with a 6