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

question 114

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 only show nominal returns
• D)The bond may have a higher face value

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Definitions:

Necessity-based Entrepreneurship

Entrepreneurial activities that are initiated as a result of a lack of viable employment options, leading individuals to start their own business to sustain themselves.

Quest for New Opportunities

The proactive and continuous search for new avenues for growth, improvement, or competitive advantage.

Absolute Need

An absolute need refers to a requirement that is essential for survival or to maintain a certain quality of life, without which a significant detriment occurs.

Growing Too Fast

A scenario where a business expands at a rate that may be unsustainable, leading to potential operational, financial, or quality control problems.