Question

Which of the following bonds offers the highest current yield? a. A(n) 3.24%, 19-year bond quoted at 44.266. b. A(n) 5.40%, 28-year bond quoted at 73.777. c. A(n) 1.62%, 23-year bond quoted at 22.133. The current yield of the bond in part a is % (Round to two decimal places.) The current yield of the bond in part bis %. (Round to two decimal places.) The current yield of the bond in part c is %. (Round to two decimal places.) Which of the three bonds offers the highest current yield? (Select the best answer below.) O A. The bond in part a has the highest current yield because it is held for the longest period of time. O B. All of the above bonds have a current yield of approximately 7.32%. O C. The bond in part b has the highest current yield because it has the highest coupon rate and the highest market value.

Answer 1

Current yield=Coupon rate/Price%

1.
=3.24%/44.266%
=7.3194%

2.
=5.40%/73.777%
=7.3194%

3.
=1.62%/22.133%
=7.3194%

4.
All of the above bonds have a current yield of approximately 7.32%