Questions: What is a bond's current yield?

What is a bond's current yield?
Transcript text: What is a bond's current yield?
failed

Solution

failed
failed

The answer is the fourth one: Current yield = Annual coupon payment/Price.

Explanation for each option:

  1. Current yield = Annual coupon/Face value: This is incorrect. The current yield is not calculated using the face value in the denominator.

  2. Current yield = Current price/Face value: This is incorrect. This formula does not relate to the current yield; it seems to confuse the concept of yield with a price ratio.

  3. Current yield = Annual coupon/Par value: This is incorrect. The par value is another term for face value, and the current yield is not calculated using the par value in the denominator.

  4. Current yield = Annual coupon payment/Price: This is correct. The current yield of a bond is calculated by dividing the annual coupon payment by the current market price of the bond. This formula reflects the income return on the bond based on its current price.

In summary, the correct formula for a bond's current yield is the annual coupon payment divided by the current price of the bond.

Was this solution helpful?
failed
Unhelpful
failed
Helpful

Questions asked by other users

failedAnswered
I. Materials Needed: pen, Learning Activity Sheet V. Instructions: Identify what is being described by the given images and discuss its characteristics.
failedAnswered
Given the following mixed-phase reaction at equilibrium: BaF2(s) + 2 H2O(l) ⇌ Ba(OH)2(s) + 2 HF(aq) with ΔrH>0 Indicate the direction will shift after each indicated perturbation. Addition of more solid BaF2: Addition of pure HF: Decrease the temperature of the reaction: Add pure water to dilute the reaction:
failedAnswered
Temperature ('O) Match the words in the left column to the appropriate blanks in the sentences on the right. Make certain each sentence is complete before submitting your answer. View Available Hint(s) sublimation freezing deposition condensation melting triple point 1. The transition shown by the line from D to C is . 4. The transition shown by the line from E to F is . 5. The transition shown by the line from C to E is . 6. The transition shown by the line from F to E is . 7. The transition shown by the line from C to D is . 8. The point indicated by B is the .
failedAnswered
Chemical Reactions Finding molar mass from chemical formulae The chemical formula for dimethyl ether is: CH3OCH3 Calculate the molar mass of dimethyl ether. Round your answer to 2 decimal places. g · mol^-1 × 10
failedAnswered
The sum of forty and y