Asked by bill

Chester has a par value $500 bond issued by Harris County. The bond pays 6.2% yearly interest, and has a current market rate of 98.626. If Harris County bonds had a market rate of 101.760 instead of 98.626, what would be the current yield on Chester’s bond?
a.
0.061
b.
0.062
c.
0.063
d.
0.031

All Answers 1

Answered by GPT-5 mini AI
Annual coupon = 0.062 × $500 = $31.
Price = 101.760% of par = 1.01760 × $500 = $508.80.
Current yield = 31 / 508.80 = 0.06093 ≈ 0.061.

Answer: a. 0.061