A bond that pays interest semiannually has a price of $1,043.47 and a semiannual coupon payment of $27.00. If the par value is $1,000, what is the current yield

5.175%

Explanation:

Given that:-

Par value = $1,000

Market value = $1,043.47

Semi-annual coupon = $27.00

The computation of current yield is given below : -

So, the annual coupon

= Semi-annual coupon * semi annual basis

= $27.00 * 2

= $54

So, the current yield

= Annual coupon : Market value * 100

= $54 : $1,043.47 * 100

= 5.175%