A bond has a par value of $1,000, a 6% annual coupon rate, and currently trades at $950 in the market. What is the bond’s current yield?

(A) 5.70%
(B) 6.00%
(C) 6.32%
(D) 6.50%

The answer is: (C) 6.32%
Annual coupon payment = 6% × $1,000 = $60
Current yield = Annual coupon ÷ Market price = $60 ÷ $950 = 0.0632 = 6.32%