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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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