Homework Answers
Correct answer is option (B) Current yield is lower than coupon rate
Explanation:-Current yield of bond is given by coupon payment divided by current price
Now lets take face value of bond be $1000
Now coupon =8%of 1000=80
And when current price will be greater than par value i.e,greater than $1000 then resultant current yield will be less than 8%
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