The current yield is calculated by dividing the annual interest payment by the current market price of the bond, and then multiplying by 100 to get a percentage.
Since the bond makes interest payments of $45 every six months, the annual interest payment can be calculated by multiplying $45 by 2 (to get the total interest payment for the year) which is $90.
The current market price of the bond is $920.
So, the current yield on the bonds is (90/920) * 100 = 9.78%.
Therefore, the current yield on these bonds is approximately 9.78%.
Consolidated Industries bonds have a face value of $1,000 and make interest payments of $45 every six months. If these bonds currently sell for $920, what is the current yield on these bonds?
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