Addleson Corp. has a $1,000 par value bond outstanding that was issued for 30 years 5 years ago at a coupon rate of 15%. What is it yielding if it is selling for $938.81?

Question

Quizplus · Accepted Answer

To find the yield, we need to calculate the bond's current yield. The coupon payment is calculated as $1,000 x 15% = $150. The current yield is calculated as the annual coupon payment divided by the current market price, which is $150/$938.81 = 0.1595 or 15.95%. Rounded to the nearest whole percentage, the yield is 16%. Therefore, the correct answer is C.