If the annual coupon rate is 7 percent on a $1000 face value bond with market price equal to $ 985. Find current yield

7.1%

Step-by-step explanation:

Current yield is the ratio of coupon payment of a bond to its current market price. It is calculated by using coupon payment and the current market value of the bond.

As per given data

Coupon rate = 7%

Face value = $1,000

Market Value = $985

Coupon Payment = $1,000 x 7% = $70

Formula for Current yield is as follow

Current Yield = Annual Coupon Payment / Current Market Price

Current Yield = $70 / $985

Current Yield = 7.11%