Question

Determine the current yield on a corporate bond investment that has a face value of $1,000, pays 4.60 percent, and has a current price of $950

Answer 1

To find the current yield - take the annual interest payment and divide it by the current bond price.

To find the annual interest payment - take the interest rate and multiply it against the bond's face value.

Annual interest payment = ($1,000)(.0460))
Annual interest payment = $46

To find the current yield - take the annual interest payment and divide it by the current bond price.
Current yield = $46/$950
Current yield = 4.84%