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a coupon bond that pays interest of $68 annually has a par value of $1,000, matures in 5 years, and is selling today at a $77.25 discount from par value. the current yield on this bond is .

Answer :

Parraingo

The current yield on the bond, based on the annual coupon, and the current yield, can be found to be 7.37%.

How to find the current yield?

The current yield on the bond can be found by the formula:

= Annual coupon / Current price of bond

The annual coupon is:
= $68

The current price of the bond is:

= Par value - discount

= 1, 000 - 77.25

= $922. 75

The current yield is:

= 68 / 922. 75

= 7.37%

In conclusion, the current yield on such a bond would be 7.37%.

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