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1046.01-1027.28A 3.25 percent Treasury bond is quoted at a price of 99.04. The bond pays interest semiannually. What is the current yield

Answer :

Tundexi

Answer:

3.28%

Explanation:

Current yield = Annual Coupon payment / Market price of the bond

Annual Coupon payment = 3.25% of face value = 3.25% * $100

= $3.25 "value is assumed at $100"

Market price of the bond = $99.04

Therefore , Current yield = $3.25 / $99.04

= 0.03281

= 3.28%

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