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5 December, 23:53

Malko Enterprises' bonds currently sell for $1,020. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?

a. 6.40%

b. 6.91%

c. 6.62%

d. 7.35%

e. 8.46%

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Answers (1)
  1. 5 December, 23:56
    0
    Current yield = Annual coupon

    Current market price

    Current yield = $75

    $1,020

    Current yield = 0.0735 = 7.35%

    The correct answer is D

    Explanation:

    Current yield equals annual coupon divided by the current market price of the bond.
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