Series 7 - General Securities Representative Exam

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An investor purchases a callable convertible bond that is currently trading in the market at 98. The bond is convertible at $30. If the basis is 8.5 percent and the nominal yield is 8 percent, what is the current yield?

15.06%
A
6.18%
B
8.67%
C
8.16%
D

Explanations

Current yield formula is Annual interest divided by market price. The other information in this question is unnecessary and shows what a question on the actual exam may look like. 80/980 = 8.16%

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