What Is the Current Yield of a Bond with a 6

question 86

Multiple Choice

What is the current yield of a bond with a 6 percent coupon, four years until maturity, and a price of $750?

• A)6.0 percent
• B)8.0 percent
• C)12.0 percent
• D)14.7 percent

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Definitions:

Debt

Money owed by one party to another, under conditions of repayment often including interest.

Book Value

The net value of a company's assets minus its liabilities, often used to assess a company's worth from a financial statement perspective.

Capital Accounts

Financial records that show the capital contributions, withdrawals, and earnings of owners in a company.

Cost of Capital

The rate of return a company must offer investors to entice them to invest, reflecting the risk of the investment alongside the return.