A Puppy Pet Services $1,000 bond has a 7.5% coupon rate, matures in 2020, and is currently quoted at $820. What is the current yield? (Round the answer to two decimal places.)

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual coupon payment by the current market price of the bond. The annual coupon payment is $1,000 * 7.5% = $75. The current market price is $820. So, the current yield = ($75 / $820) * 100 = 9.15%.

A Puppy Pet Services $1,000 Bond Has a 7