mathe

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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 -

    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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