Final answer:
The current yield on GHI Company bonds with a coupon rate of 8.38 percent and a price of $1,090 is 7.68 percent. This yield is obtained by dividing the annual coupon payment of $83.80 by the current bond price of $1,090 and then multiplying the result by 100%.
Step-by-step explanation:
The current yield on GHI Company bonds with a coupon rate of 8.38 percent is calculated based on the annual coupon payment and the current price of the bond. The coupon payment, which is the annual interest payment to bondholders, is 8.38 percent of the $1,000 face value, equating to $83.80 per year. Given the current price of the bond is $1,090, the current yield is calculated by dividing the annual coupon payment by the bond's current price.
Current yield = (Annual coupon payment / Current bond price) * 100%
Current yield = ($83.80 / $1,090) * 100%
Current yield = 7.68%