A bond has a par value of $1,000,a market price of $300,and a 9% coupon rate.It will mature in 5 years.What is the current yield of the bond?

Question

Quizplus · Accepted Answer

Current yield is calculated by dividing the annual interest payment by the market price of the bond and multiplying by 100. In this case, the annual interest payment is 9% of $1,000 which is $90. 
Current yield= (Annual Interest Payment / Market Price) × 100 
Current Yield = (90 / 300) × 100 = 30%
Therefore, the correct answer is D) 48.27%.

A Bond Has a Par Value of $1,000,a Market Price