What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $975?
A)7 percent
B)7.18 percent
C)8.33 percent
D)9 percent
E)10 percent

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual interest payment by the current market value of the bond and then multiplying by 100 to get a percentage.

Annual interest payment = 7% of $1,000 = $70

Current yield = ($70 / $975) x 100 = 7.18%

Therefore, the answer is choice B.

What Is the Current Yield for a $1,000 Corporate Bond