The Current Yield will be 27.55%
[tex]Current.Yield = \frac{Annual.Coupon.Payment}{Current.Bond.Price}[/tex]
Given in the question:
Annual coupon rate= 10%=0.1
Par value=100
time= 3 years
current value=107.87
To Find: Current Yield
What is current yield?
The current yield represents the bond's annual return based on a bond's current price and coupon payments. A bond's coupons payment divided by its current price is the formula for calculating current yield.
[tex]Current.Yield = \frac{Coupon.Payment}{Current.Bond.Price}*100[/tex]
Annual coupon payment = Par value * Annual coupon rate*time
⇒Coupon payment = 100*0.1*3
⇒Coupon payment=30
⇒ [tex]Current.Yield = \frac{30}{108.87}*100[/tex]
⇒ Current Yield=27.55%
Learn more about Current Yield here:
https://brainly.com/question/12909555
#SPJ10
