Question

What is a bond's current yield?

Multiple choice question.

Current yield = Current price/Face value


Current yield = Annual coupon/Face value


Current yield = Annual coupon payment/Current price


Current yield = Annual coupon/Par value

Answer 1

The correct answer is:

**Current yield = Annual coupon payment / Current price**

This formula calculates the yield based on the annual income you receive from the bond relative to its current market price.