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10-03-2020
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Genova Corporation has a four year 10% annual coupon bond. The price of the bond is $956.12. The Yield to Maturity is 11.43%. What is the current yield on this bond

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andromache andromache

12-03-2020

Answer:

10.46%

Explanation:

Data provided in the question

NPER = 4 years

Price of the bond is $956.12

Yield to maturity is 11.43%

Coupon rate = 10%

We assume the face value be $1,000

So the coupon payment is

= Face value × Coupon rate

= $1,000 × 10%

= $100

Now the current yield on this bond is

= Coupon payment ÷ Price of the bond

= $100 ÷ $956.12

= 10.46%

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