a 2000$ treasury bond with a coupon rate of 4.5% that has a market value of 1850$
What's the current yield?
To calculate the current yield of a bond, you need to divide the bond's annual interest payment (coupon payment) by its market value and multiply the result by 100.
In this case, the bond has a coupon rate of 4.5% and a market value of $1850. Since the coupon rate is a percentage, we need to convert it to a decimal by dividing it by 100. Therefore, the coupon rate is 0.045.
The annual interest payment, or coupon payment, is calculated by multiplying the coupon rate by the face value of the bond. Since the face value is not given in the question, we cannot determine the exact coupon payment. If you have the face value, you can calculate it by multiplying the face value by the coupon rate: Coupon payment = Face value * Coupon rate.
Given that you don't have the face value, you won't be able to calculate the exact coupon payment. As a result, we cannot determine the current yield.