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A bond with par value of $1,000 has an annual coupon rate of 4.8% and currently sells for $970. What is the bond’s current yield? (Round your answer to 2 decimal places.)
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A bond with par value of $1,000 has an annual coupon rate of 4.8% and currently sells for $970. What is the bond’s current yield? (Round your answer to 2 decimal places.)

User Prabhu Murthi
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1 Answer

3 votes

Answer:

The Bond's Current yield = 4.95%

Step-by-step explanation:

Annual coupon = Value of Bond * Annual Coupon rate

Annual coupon = $1000 * 4.8%

Annual coupon =$48

The Bond Current yield =Annual coupon / Current price

The Bond Current yield = $48 / $970

The Bond Current yield = 0.049485

The Bond Current yield = 4.9485

The Bond Current yield = 4.95%

User Athom
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