A bond has a par value of $1,000 and coupon rate of 9.0%. The bond matures...
A bond has a par value of $1,000 and coupon rate of 9.0%. The bond matures in five years and is selling at a $50 premium relative to par value. What is the bond's current yield?
Homework Answers
Price = Par value + premium
Price = $1000 + $50
Price = $1050
Coupon = 9% of 1000 = 90
Current yield = (Annual coupon / price) * 100
Current yield = (90 / 1050) * 100
Current yield = 8.57%
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