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29 December, 10:21

A Puppy Pet Services $1,000 bond has a 7.5 percent coupon rate, matures in 2016, and is currently quoted at $820. The current yield is:A. 6.15 percent. B. 7.50 percent. C. 9.15 percent. D. 10.27 percent. E. 11.43 percent.

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  1. 29 December, 11:36
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    Option (C) is correct.

    Explanation:

    Face Value = $1,000

    Current Price = $820

    Annual Coupon Rate = 7.50%

    Annual Coupon = Annual Coupon Rate * Face Value

    = 7.50% * $1,000

    = $75

    Current Yield = Annual Coupon : Current Price

    = $75 / $820

    = 0.0915 or 9.15%
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