A bond with a face value of $1,000 has a current yield of 6.5 percent and a coupon rate of 7 percent. What is the price of the bond?

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual coupon payment by the current market price of the bond and then multiplying the result by 100.

Current yield = (Coupon payment / Market price) x 100
6.5 = (70 / Market price) x 100
Market price = $1,076.92

Therefore, the price of the bond is $1,076.92, which is closest to option C.

A Bond with a Face Value of $1,000 Has a Current