A bond's current yield is defined as
A) the bond's annual coupon rate divided by the bond's par value.
B) the bond's annual coupon rate divided by the market interest rate.
C) the bond's annual coupon rate divided by the bond's current market price.
D) the bond's annual coupon rate divided by the bond's original issue price.

Question

Quizplus · Accepted Answer

The current yield of a bond is calculated by dividing the bond's annual coupon payments by its current market price, not its par value, market interest rate, or original issue price. This gives investors an idea of the income they can expect relative to the price they pay for the bond in the market.

A Bond's Current Yield Is Defined as