Answer:
Current yield = 0.04850444624 or 4.850444624% rounded off to 4.85%
Explanation:
The current yield is the yield of a bond provided by its interest or coupon payments as a percentage of its current price. The formula to calculate current yield is as follows,
Current Yield = Interest payment per year / Current price of the bond
As the bond is a semi annual bond, assuming that the par value is 100, the semi annual and annual interest or coupon payment will be,
Semi annual coupon = 100 * 0.048 * 6/12 = $2.4
Annual coupon payment = 2.4 * 2 = 4.8
Current Yield = 4.8 / 98.96
Current yield = 0.04850444624 or 4.850444624% rounded off to 4.85%
