SIE practice questionmediumYield Calculations
A $1,000 face value bond with a 6% coupon is currently selling for $950. What is the bond’s current yield?
- A6.00%
- B6.32%✓ Correct answer
- C5.70%
- D7.09%
Explanation
Why B — 6.32%
Current yield is calculated as annual interest ($60) divided by market price ($950), or $60 ÷ $950 = 6.32%. Option A is the coupon rate (not current yield), while C and D use incorrect inputs or calculations.
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