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

The current yield is 3.11%.

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*500=14` dollars

The current market value is $450

So, current yield is =
`(14)/(450)*100= 3.11`%

The current yield is 3.11%.