What is the current yield of a four-year semi-annual pay bond with a par value of $1,000 and a 4 percent coupon rate when the bond is priced at $932.35?

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the bond's current price. The annual coupon payment is 4% of $1,000, which is $40. The current yield is $40 / $932.35 = 0.0429 or 4.29%.

What Is the Current Yield of a Four-Year Semi-Annual Pay