A company's $1,000 bond has a 7.5% interest rate and is currently selling for $820.The current yield is

Question

Quizplus · Accepted Answer

The current yield formula is:
(Current annual interest payment / Current market price) x 100%

Using the given information we can calculate the current annual interest payment:
$1,000 x 7.5% = $75

Plugging in the values, we get:
($75 / $820) x 100% = 9.15%

Therefore, the current yield is 9.15%. Option (C) is correct.

A Company's $1,000 Bond Has a 7