If an 8% coupon bond is trading for $1025.00,it has a current yield of ____________ percent.

Name: If an 8% coupon bond is trading for $1025.00,it has a current yield of ____________ percent.
Brand: Quizplus
Rating: 4.9 (53 reviews)

Question

Quizplus · Accepted Answer

The current yield is the annual coupon payment divided by the current market price of the bond. In this case, the annual coupon payment is $80 (8% of $1000) and the current market price of the bond is $1025.00. Therefore, the current yield is $80/$1025.00 = 7.8%.

If an 8% Coupon Bond Is Trading for $1025