If a 6% coupon bond is trading for $950.00,it has a current yield of ____________ percent.

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the market price of the bond:

Current yield = (Coupon payment / Market price) x 100%

For a 6% coupon bond trading at $950, the annual coupon payment is 6% x $1,000 = $60. The current yield is:

Current yield = ($60 / $950) x 100% = 6.3%

Therefore, the correct choice is (B).

If a 6% Coupon Bond Is Trading for $950