question archive Candy Enterprises' bonds currently sell for $980
Candy Enterprises' bonds currently sell for $980
Subject:FinancePrice:4.89 Bought3
Candy Enterprises' bonds currently sell for $980. They have a 6-year maturity, an annual coupon rate of 6.5 percent with semiannually payment, and a par value of $1,000. What is their current yield?
Select one:
a. 6.79%.
b. 7.27%.
c. 6.52%.
d. 7.65%.
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Current yield = 6.63%
Current yield = annual coupon payment/ current market price
Annual coupon payment = coupon rate * bond's par value
= 6.5% of 1,000
= 65
Current market price = 980
Current yield = (65/ 980) * 100
= 6.63%
