- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 5. Yield Measures for Fixed-Rate Bonds

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**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%

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**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 |