Current Yield What's the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70?
A)5.9 percent
B)6.0 percent
C)6.1 percent
D)10.2 percent

Question

Quizplus · Accepted Answer

The current yield is calculated by dividing the annual interest by the current price of the bond. 
Annual interest = 6% of the face value = 0.06 x 1000 = $60 
Current price = 101.70% of the face value = 1.017 x 1000 = $1017 
Current yield = ($60/$1017) x 100% = 5.9% 
Therefore, the current yield is 5.9 percent, which is option A.

Current Yield What's the Current Yield of a 6 Percent