The current Yield on the price of $958.56 and a semiannual coupon payment of $29.50. If the par value is $1,000 is 6.16%.
Current Yield is defined as the rate of return that is yielded by a bond on its actual price, without share for the information that it will be pay off at par at maturity date.
The formula of the Current Yield is:
[tex]\text{Current Yield}= \dfrac{\text{Annual Coupon Payment}}{\text{Price Of Bond}}}[/tex]
According to the given information,
Price = $958.56
Coupon Payment = $29.50
Per Value = $1000
Current Yield = ?
Annual Coupon Payment:
[tex]\text{Annual Coupon Payment} = \text{Semi-Annual Coupon Payment} \times 2\\\\\text{Annual Coupon Payment} =\$29.50 \times 2\\\\\text{Annual Coupon Payment} = \$59[/tex]
Then apply the given values in the above formula, to get the current Yield:
[tex]\text{Current Yield}= \dfrac{\text{Annual Coupon Payment}}{\text{Price Of Bond}}\\\\\text{Current Yield}= \frac{59}{958.56}\\\\\text{Current Yield}= 0.06155\\\\[/tex]
Then the current Yield rate is:
[tex]=\dfrac{0.06155 }{14000}\\\\ =6.16\%[/tex]
To learn more about the yield, refer to:
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