Suppose that you read in The Wall Street Journal that a bond has a coupon rate of 9 percent, a price of 71 3/8, and pays interest annually. Rounded to the nearest whole percent, what would be the bond's "current" yield

This question is missing the options given below:

A. 11%

B. 13%

C. 15%

D. 17%

E. 20%

The correct answer is option B, the bond current yield is 13%

Explanation:

Bonds Current Yield = Year one cash flow / Current Price x 100 = 9 / 71.375 x 100 = 12.60% or approximately 13%

Note that 71 3/8 is the same as 71.375% as 3/8 gives 0.375 and when added to 71% gives 71.375%

The year cash flow is calculated as : 9% of bond par value ($100) = $9