A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today for $915.48. The yield to maturity on this bond is approxi…

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asked Dec 7, 2021 136k views

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Baronvonbirra · Answer 1 · 2021-12-12T20:44:07+0000

Answer:
b. 6.49%
Step-by-step explanation:
Calculation for The current yield on this bond
First step is to calculate the Current price
Current price = $1,000 - 75.25
Current price = $924.75
Now let calculate the Current yield using this formula
Current yield =Coupon bond interest/Current price
Let plug in the formula
Current yield = $60/$924.75
Current yield = 6.49%
Therefore the current yield on this bond is 6.49%

A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today for $915.48. The yield to maturity on this bond is approxi…

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