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Homework answers / question archive / A $1,000 par value bond paying a 8% semi-annual coupon with 19 years to maturity is priced at $1105
A $1,000 par value bond paying a 8% semi-annual coupon with 19 years to maturity is priced at $1105. This bond is callable in 11 years at a price of $1,050.
What is this bond's Current Yield?
Group of answer choices
6.93%
7.24%
7.85%
6.54%
Computation of Bond's Current Yield:
Bond's Current Yield = Annual Coupon Payment / Current Stock Price
= (1000*8%)/1105
= 80/1105
Bond's Current Yield = 7.24%
So, the correct option is 2nd "7.24%".
