Question
Mr. X bought a bond at 1000 at a 10% coupon rate. But he
intends to sell the bond after a year to Mr. Y. Mr. Y purchased the bond at 986. At the end of the second year, Mr. Y got the interest income on his bond. What is his (Y) current yield?Solution
          Current Yield = interest income/current price of a bond           Interest Income = 1000@ 10% = 100           Current Market price = 986           Current Yield = 10.14%
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