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Basic Question 7 of 10
The current yield on a 20-year, 8.5% bond, when the market price is $104.95, is ______.
B. 8.35%
C. 8.50%
A. 8.10%
B. 8.35%
C. 8.50%
User Contributed Comments 6
| User | Comment |
|---|---|
| jpducros | Shouldn't we use the coupon payment, which would be 8,5/2 ? and then divide by the market price. |
| DonAnd | Coupon pmt = 8.5% of $100 which $8.50 CY=$8.50/$104.95=8.10% |
| 2014 | as per definition u need to take annual amount of coupon/price |
| jasonkwk | use semi annual yield when discounting future cashflow to the present only |
| Fabulous1 | You could also use the seminannual coupon payment to calculate the semiannual current yield but then you would have to bring it back to a stated annual yield but multiplying times 2 so just save your time and take the annual coupon right away. |
| khalifa92 | annualized payment/flat price |
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Learning Outcome Statements
compare, calculate, and interpret yield and yield spread measures for fixed-rate bonds
CFA® 2024 Level I Curriculum, Volume 4, Module 7.