Question

What's the current yield of a 5.60 percent coupon bond quoted at a price of 97.18? (Round your answer to 2 decimal places..)

Answer 1

Solution:
	Current yield = 5.76%
Working Notes:
	Current yield = Annual Coupon /Bond Price
	Annual Coupon = Face value of bond x Coupon rate
	= $100 x 5.60%
	=$5.60
	Bond price = $97.18
	Current yield = Annual Coupon /Bond Price
	=$5.60/$97.18
	= 0.057625026
	= 5.762502573 %
	=5.76 %	.
Notes:	Since quoted price of the bond is $97.18 , hence its face value must be $100 is considered 9as per general assumption)
Please feel free to ask if anything about above solution in comment section of the question.