Answer:
4.8%
Step-by-step explanation:
Bond par value = $2000
Coupon rate = 5% = [tex]\frac{5}{100}[/tex] = 0.05
Market price of bond = $2070
Current yield of bond = [tex]\frac{Annual Dollar Interest Paid}{Market Price} *100[/tex]%
= [tex]\frac{Coupon\hspace{3}rate*Bond\hspace{3}par\hspace{3}value}{Market\hspace{3}Price} *100[/tex]%
= [tex]\frac{0.05*2000}{2070} *100[/tex]%
= [tex]\frac{100}{2070} *100[/tex]%
= 0.048*100%
= 4.8%
