The Annual Rate of Return Method Is Also Referred to as

question 37

Multiple Choice

The annual rate of return method is also referred to as

• A)simple rate of return method.
• B)accounting rate of return method.
• C)unadjusted rate of return method.
• D)all of the above

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Definitions:

Par-Value

The face value of a bond or stock as stated by the issuer, which is typically the amount repaid at maturity for bonds.

Modified Duration

A formula used to determine the sensitivity of a bond's price to a 1% change in interest rates, indicating the percentage change in price for each percentage point change in yields.

Market Yield

The current annual income returned on an investment, measured as a percentage of the investment's market price.