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Homework answers / question archive / A Treasury bond is quoted at a price of 106:23 with a 3
A Treasury bond is quoted at a price of 106:23 with a 3.50 percent coupon. The bond pays interest semiannually. What is the current yield on one of these bonds
Calculation of Coupon payment
Coupan Payment = Face value * Coupon rate
= $100*3.5% = $3.50
Calculation of market price of bond
MP. = $106 + 23/32 = $106.71875
Current yield = Coupon payment/Current price
Current yield. = 3.5/106.71875 = 3.2796%
Current yield roinded off to 3.28%
