Question

Determine the current yield on a corporate bond investment that has a face value of $1,000, pays 8 percent, and has a current price of $940.

Answer 1

8.5%

Step-by-step explanation:

Calculation to Determine the current yield on a corporate bond investment

First step

Amount of annual interest

=Face value × Interest rate

=$1,000 × 0.08

=$80

Now let calculate the Current yield

Current yield =Annual interest amount / Current price

=$80/ $940

=0.085, or 8.5%

Therefore the current yield on a corporate bond investment is 8.5%