The Average Rate of Return Earned on a Callable Bond

question 85

Multiple Choice

The average rate of return earned on a callable bond if it is held until the first call date is the:

• A)yield to call.
• B)yield to market.
• C)yield to principal price.
• D)yield to issue price.
• E)yield to maturity.

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Definitions:

T-test

A statistical test used to determine if there is a significant difference between the means of two groups, which may be related in certain features.

Regression Line

A straight line in a scatter plot that best represents the relationship between two variables, typically used in linear regression analysis to predict values.

Standard Error

A statistical measure that represents the accuracy with which a sample distribution represents a population, particularly the variability in an estimated mean.

Parsimony

The principle of using the simplest or least complicated explanatory means necessary to adequately account for observed phenomena, often used in model selection.