Exhibit 11-1
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT PROBLEM(S) $\begin{array}{ccccccccc}
& & & &&&&& \text { Est } \$ \
& & & & \text { Last } & \text { Last } & \text { EST } && \mathrm{Vol} \
\text { Company } & \text { Ticker } & \text { Coupon } & \text { Maturity } & \text { Price } & \text { Yield } & \text { Spread } & \text { UST } & (000 ' s) \
\hline \text { Gen Elec } & f^{\prime} E^{\prime} & 475 & 9 / 15 / 2014 & 99544 & 4808 &62&10& 158736
\end{array}$
-Refer to Exhibit 11-1. What is the current yield for this bond?
A) 4.18%
B) 5.88%
C) 4.77%
D) 8.125%
E) 4.063%

Question

Quizplus · Accepted Answer

The current yield is calculated as the annual interest payment divided by the current price of the bond. For the Gen Elec bond, the annual interest payment is $4.75 (from the 475 coupon, which is typically expressed as a percentage of the face value, here assumed to be $100), and the current price is 99.544. Thus, the current yield = ($4.75 / $99.544) * 100 = 4.77%.

Exhibit 11-1 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT

Exhibit 11-1
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT