Current Yield What's the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70?
A) 5.9%
B) 6.0%
C) 6.1%
D) 10.2%

Question

Quizplus · Accepted Answer

The current yield represents the annual interest payment as a percentage of the current market price of the bond. To calculate the current yield of the bond, we divide the annual interest payment by the current market price and then multiply by 100.

Annual interest payment = 6% of the par value = 0.06 x 1000 = $60

Current market price = 101.70% of the par value = 1.017 x 1000 = $1,017

Current yield = ($60/$1,017) x 100 = 5.90%

Therefore, the answer is choice A, which is 5.9%.

Current Yield What's the Current Yield of a 6 Percent