A 10-year bond with a $1,000 face value and 6% coupon rate is currently selling in the bond market for $700.Its current yield is

Question

Quizplus · Accepted Answer

The current yield is the annual coupon payment divided by the market price. 
The annual coupon payment is $1,000 x 6% = $60. 
The market price is $700. 
Therefore, the current yield is $60/$700 = 0.086 or 8.6%. 
Therefore, the correct answer is C.

A 10-Year Bond with a $1,000 Face Value and 6