SIE practice questionmediumCurrent Yield
A bond with a $1,000 face value and an 8% coupon is selling for $900. What is its current yield?
- A11.11%
- B8.00%
- C7.20%
- D8.89%✓ Correct answer
Explanation
Why D — 8.89%
Current yield = ($80 ÷ $900) = 8.89%. 8% is the coupon, 7.2% is with $900 interest, and 11.11% is incorrect math.
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