American Hat has $1,000 face value bonds outstanding with a market price of $1,150. The bonds pay interest semiannually, mature in 8 years, and have a yield to maturity of 5.98 percent. What is the current yield?
Multiple Choice
7.28 percent
6.15 percent
6.44 percent
7.06 percent
Calculating Coupon Payment on Bond,
Using TVM Calculation,
PMT = [PV = -1,150, FV = 1,000, N = 16, I = 0.0598/2]
PMT = 41.83
Current Yield = 2(41.83)/1,150
Current Yield = 7.28%
American Hat has $1,000 face value bonds outstanding with a market price of $1,150.