The Current Yield Tends to Understate a Bond's Total Return

question 68

Multiple Choice

The current yield tends to understate a bond's total return when the bond sells for a discount because:

• A) increases in interest rates will increase the current yield.
• B) the bond's price will increase each year.
• C) current yields show only nominal returns.
• D) the bond may have a higher face value.

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Definitions:

Labor Organization

Groups such as unions or associations that represent the interests of employees, working to improve working conditions, wages, and benefits through negotiation and collective bargaining.

1600s

The 17th century, a period marked by significant global exploration, colonization, and the beginning of the modern world system.

John Eliot

A Puritan missionary known as the "Apostle to the Indians" for his efforts to convert Native American peoples to Christianity in the 17th century.

New England Indians

Indigenous peoples from the New England region of the United States with distinct cultural and historical backgrounds.