Question

4.C.48 Calculate the current yield on the described bond. A $500 Treasury bond with a coupon rate of 2.8% that has a market value of $450 The current yield is %. (Round to two decimal places as needed.) tents hual uccess a Library Success le Resources

Answer 1

Answer:

The current yield is 3.11%.

Step-by-step explanation:

Given - A $500 Treasury bond with a coupon rate of 2.8% that has a market value of $450.

Now the face value of the bond is = $500

The rate of interest is = 2.8%

Then interest on $500 becomes:

$0.028\times500=14$ dollars

The current market value is $450

So, current yield is = $\frac{14}{450}\times100= 3.11$%

The current yield is 3.11%.