SIE Exam Question 346: Answer and Explanation

Question: 346

A corporate bond that is currently trading at 95 pays a semi-annual coupon of $25. What is the current yield?

• A. 0.0526
• B. 0.05
• C. 0.0263
• D. 0.025

Correct Answer: A

Explanation:

A - A bond's current yield is calculated by dividing the annual interest income by the current market price. $50/$950 = 5.26%.