Find the Current Yield of a Bond Whose Coupon Rate

question 42

Multiple Choice

Find the current yield of a bond whose coupon rate is listed as 5.875% and currently selling at a discount of 92.375. (Round to the nearest tenth percent)

• A) 7.1%
• B) 6.6%
• C) 6.3%
• D) 6.4%

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Definitions:

Reasonable Skill

The level of competence that one can expect from a person with the standard abilities and knowledge in a particular field.

Breach of Contract

Occurs when one party fails to fulfill their obligations under a contract without a lawful excuse.

Agency Contract

A legal agreement where one party, the agent, agrees to act on behalf of another, the principal, in business dealings.

Duty of Obedience

The requirement for directors and officers of an organization to act in accordance with its governing documents and decisions made by its governing body.