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      Question

      A bond is trading at Rs.1100. The bond has a face value

      of Rs.1000 and pays a coupon rate of 8%. It will mature in 5 years. What is the current yield of the bond?
      A 8.00% Correct Answer Incorrect Answer
      B 7.27% Correct Answer Incorrect Answer
      C 8.80% Correct Answer Incorrect Answer
      D 9.52% Correct Answer Incorrect Answer
      E Cannot be determined Correct Answer Incorrect Answer

      Solution

      Current yield = coupon/current market price = 80/1100 = 7.27%

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