Final answer:
The current yield on a bond is calculated by dividing the annual interest payment by its market price. For the bond described, the current yield is 5.92%, calculated by dividing $55.26 by $933.75, representing the income return on the bond.
Step-by-step explanation:
To calculate the current yield on a coupon bond that pays annual interest and sells at a discount from par value, you divide the annual interest payment by the market price of the bond. The bond in question has a par value of $1,000, pays $55.26 annually in interest, and sells for $933.75 ($1,000 - $66.25 discount). To determine the current yield, you take $55.26 and divide it by $933.75, which equals approximately 0.0592 or 5.92% when expressed as a percentage.
This current yield represents only the income portion from the interest and does not account for any capital gain or loss if the bond is held to maturity. However, it is an important measure to understand the return you would expect to receive if you purchased the bond today.