Suppose, two years ago, you purchased a 10-year coupon bond paying 4.5% interest annually with a face value of $1000. It is now two years later and you just received an interest payment yesterday (the bond matures in exactly eight years). You look in the paper and the yield on comparable debt is 4.25%. What is the Current Yield?

Answer rating: 100% (QA)

The current yield is calculated by dividing the annual interest payment by the bonds current market price Since the bond has already been held for two ... View the full answer