- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 7. Yield and Yield Spread Measures for Fixed-Rate Bonds
- Subject 2. Other Yield Measures, Conventions, and Accounting for Embedded Options
CFA Practice Question
The current yield on a 20-year, 8.5% bond, when the market price is $104.95, is ______.
B. 8.35%
C. 8.50%
A. 8.10%
B. 8.35%
C. 8.50%
Correct Answer: A
8.5/104.95 = .08099 = 8.10%
User Contributed Comments 6
| User | Comment |
|---|---|
| jpducros | Shouldn't we use the coupon payment, which would be 8,5/2 ? and then divide by the market price. |
| DonAnd | Coupon pmt = 8.5% of $100 which $8.50 CY=$8.50/$104.95=8.10% |
| 2014 | as per definition u need to take annual amount of coupon/price |
| jasonkwk | use semi annual yield when discounting future cashflow to the present only |
| Fabulous1 | You could also use the seminannual coupon payment to calculate the semiannual current yield but then you would have to bring it back to a stated annual yield but multiplying times 2 so just save your time and take the annual coupon right away. |
| khalifa92 | annualized payment/flat price |