A bond has a face value of $10,000; a coupon rate of interest of 5%; and an annual interest payment of $500. The bond matures on January 20, 2035. Yesterday the bond sold for $9,300 in the secondary bond market. What is the current yield on the bond?

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual interest payment by the bond's current market price. So, $500 / $9,300 = 0.05376 or 5.37%.

A Bond Has a Face Value of $10,000; a Coupon