A bond that pays interest semiannually has a price of $1,020.37 and a semiannual coupon payment of $26.50. if the par value is $1,000, what is the current yield?

Respuesta :

current yield is $0.052.

The current yield is ($26.50 * 2) / $1020.37 = $0.052.

What is Current yield?

The annual return on an investment (profit or dividends) is calculated by dividing it by the security's current price. Instead of looking at a bond's face value, this degree assesses its current price.

Bonds and other constant-interest instruments, such as gilts, are referred to by the terms current yield, hobby yield, earnings yield, flat yield, marketplace yield, mark-to-market yield, or running yield in finance.

What is actual yield?

The exact yield that an investment could receive is the present yield. The YTM can be thought of as the fee for carrying back a bond till maturity that a person will be charged. The YTM may be superior to the present Yield if a bond is issued at a discount from face value since the cut price raises the yield.

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