Question

a 3.25 percent treasury bond is quoted at a price of 99.04. the bond pays interest semiannually. what is the current yield? multiple choice 2.94% 2.99% 3.28% 3.33% 3.23%

Answer 1

The current yield of a 3.25 percent treasury bond quoted at a price of 99.04 is 3.28%.

Step-by-step explanation:

To calculate the current yield of a treasury bond quoted at a price of 99.04 and with a coupon rate of 3.25% that pays interest semiannually, you need to consider the annual interest payments received relative to the bond's current price.

Since the bond has a face value of $1,000, the annual interest payment would be $1,000 × 3.25% = $32.50. The price of the bond is given as 99.04% of its face value, which is $990.40.

Therefore, the current yield is calculated by taking the annual interest payment and dividing it by the bond's current market price, which gives us $32.50 / $990.40 = 0.0328, or 3.28% when expressed in percentage terms.

Answer 2

The current yield of a 3.25 percent treasury bond priced at 99.04 can be calculated by dividing the annual interest payment by the bond's current price. The current yield is 3.28%.

Step-by-step explanation:

The current yield can be calculated by dividing the annual interest payment by the bond's current price. In this case, the annual interest payment is 3.25% of the bond's face value of $1,000, which is $32.50. T

he current price of the bond is 99.04, so the current yield is (32.50 / 99.04) * 100 = 3.28%.