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23 November, 20:17

If ABC 10% bond closed at 101 3/8 down 3/4 for the day and would provide a current yield of 9.87%. The current yield if the bond had been purchased on the previous trading day would be:

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  1. 23 November, 20:26
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    The current yield if the bind has been purchased yesterday is 9.79%

    Explanation:

    The formula for current yield is given as:

    current yield = annual interest rate / current market price

    The annual interest rate is 10%, which translates into 10% of the par value of $100, that is $10

    Current market price today is $101 3/8, which is the same $101+$0.375 = $101.375

    The price is 3/4 less than yesterday's price

    Yesterday's price = $101.375+$0.75

    Yesterday's price=$102.13

    Yesterday's yield=10/102.13

    yesterday's yield = 9.79%
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