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5 June, 09:32

Malko Enterprises' bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?

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  1. 5 June, 09:36
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    Current yield = 7.14%

    Explanation:

    As we know that: current yield = Annual coupon payment/Current market price of bond

    = 75/1050

    = 7.14%

    this rate represents for an investor would expect to earn because face vale and market price of bonds differs so the investor much rely on that factor.
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