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Malko Enterprises’ bonds currently sell for $1,020. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield?

a. 6.40%
b. 6.91%
c. 6.62%
d. 7.35%
e. 8.46%

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Answer:

Current yield = Annual coupon

                         Current market price

Current yield = $75

                         $1,020

Current yield = 0.0735 = 7.35%

The correct answer is D

Explanation:

Current yield equals annual coupon divided by the current market price of the bond.

Answer:

7.35%

Explanation:

$75 / $1,020

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