A $1000 face value bond purchased for $965.00, with an annual coupon of $60, and 20 years to maturity has:

Question

Quizplus · Accepted Answer

Current yield is calculated as the annual coupon payment divided by the bond price. In this case, the annual coupon payment is $60 and the bond price is $965. Therefore, the current yield is 60/965 = 0.0622 or 6.22%. None of the other options are correct, as the coupon rate is not the same as the current yield or yield to maturity, and the yield to maturity cannot be determined without additional information.

A $1000 Face Value Bond Purchased for $965