Consider a bond with a 9 percent coupon and a current yield of 8 1/2 percent. What is this bond's price?

Name: Consider a bond with a 9 percent coupon and a current yield of 8 1/2 percent. What is this bond's price?
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Quizplus · Accepted Answer

The current yield is calculated as the annual coupon payment divided by the bond's price. With a 9% coupon rate, the annual coupon payment is $90. Given a current yield of 8.5%, the bond's price is $90 / 0.085 = $1058.82.

Consider a Bond with a 9 Percent Coupon and a Current