Answered

What is the current yield on a 3 year bond with 10% annual coupons, a par value of 100, and a current price of 107.87?
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Answer :

PARRAINGO

Based on the annual coupons on the bond and the current price, the current yield will be 9.27%.

What is the bond's current yield?

This can be found as:

= Annual coupon amount / Bond price

Annual coupon:

= 10% x 100

= $10

The current yield is:

= 10 / 107.87

= 9.27%

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