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    • Question

      A 5-year bond with face value ₹1000, coupon rate 8%

      p.a. (paid semi-annually), is trading at ₹950. What is the current yield?
      A 8.42% Correct Answer Incorrect Answer
      B 8.00% Correct Answer Incorrect Answer
      C 8.88% Correct Answer Incorrect Answer
      D 7.50% Correct Answer Incorrect Answer

      Solution

      Annual coupon = ₹1000 × 8% = ₹80. Current Yield = (Annual Coupon/Current Price)×100 = (80/950)×100 = 8.42%.

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