CHAPTER 7

The current yield is the bond’s annual coupon payments divided by the bond’s price today: Current yield = Annual coupon payment/Current price. Since we know that the bond is selling at a premium, it will be selling for a higher price than $1,000. If the bond were selling at par ($1,000), then the current yield would be the same as the coupon rate. Since it is selling at a premium, the ... ................
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