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In 2020,a customer buy% 5 GE 10% debentures,M,40. The interest payment dates are Feb 1st and Aug 1st The bonds are callable as of 2030 at 103. The current yield on the bonds is:________. a. 10% b. 10.81% c. 11.76% d. 12.43%

Respuesta :

hyderali230

Answer:

11.76%

Explanation:

When bond is trading at discount the current yield is higher than the coupon rate the price of the bond of the bond is lower and when the bond is trading at premium the current yield is lower than the coupon rate.

The reason for the current yield of 11.76% is higher than the coupon rate of 10%. It means it's trading at discount This is due to yield to rise above stated fixed coupon, rate price of the bond will drop in the market

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