Current yield is an investor ratio that investors use to compare various securities like bonds and stocks to make investment decisions. The current yield is the yearly cash inflows security will provide divided by the current market price of the security.
Assume company A and B both have issued 5 years bonds having a face value of $1000 both paying 8% and 9% interest annually. Suppose the current market price for Bond A is $950, the current yield will be 8.42% ($80/$950). If the market price of Bond B is $1050, the current yield will be 8.41% ($90/$1070). So the investor will choose to bond A as it has a higher yield despite a higher coupon rate.
Clifford Clark is a recent retiree who is interested in investing some
Last year Clark Company issued a 10-year, 12%
Hacker Software has 6.2 percent coupon bonds on the market
Hacker Software has 6.2 percent coupon bonds on the market
Argos Corp. has 9 percent coupon bonds making annual payments with
Bond P is a premium bond with a 9 percent coupon.
An 8% semiannual coupon bond matures in 5 years. The
Robert Black and Carol Alvarez are vice presidents of Western Money Management
Caleb buys an 8.75% corporate bond with a current
a. What is the relationship between the price of a bond
