CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

The current yield on a 20-year, 8.5% bond, when the market price is $104.95, is ______.

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
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