BONDS CURRENTLY SELL FOR $1,025 THEY HAVE A 9 YEAR MATURITY AND AN ANNUAL COUPON RATE OF $80 AND A PAR VALUE OF !1,000 WHAT IS THEIR CURRENT YEILD
7.61%
To calculate the current yield of a bond, you need to use the following formula:
Current Yield = (Annual Coupon Payment / Current Market Price) x 100
Given the information provided, we know that the bond has a maturity of 9 years, an annual coupon rate of $80, and a par value of $1,000. We also know that the current market price is $1,025.
First, let's calculate the annual coupon payment. Since the annual coupon rate is $80, the coupon payment will be $80.
Next, we'll calculate the current yield using the formula:
Current Yield = (80 / 1025) x 100
Dividing 80 by 1025 gives us 0.0780488. Multiplying this by 100 gives us an answer of approximately 7.8%.
Therefore, the current yield of the bond is approximately 7.8%.