Posted by christine on Saturday, April 6, 2013 at 3:12pm.
determine the current yield of a bond with par value of $1000 if the quoted price is 78 1/2 and the rate is 8 1/4

mathe  MathMate, Saturday, April 6, 2013 at 5:47pm
Not familiar with how bonds work. Here's a try.
Assuming the bond is issued for 30 years, then, and the current yield is x*100%.
1000=78.5(1+x)^30
1+x=(1000/78.5)^(1/30)=1.08852, or
current yield is 8.852%
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