Which of the Following Are True for the Current Yield

question 47

Multiple Choice

Which of the following are true for the current yield?

• A) The current yield is defined as the yearly coupon payment divided by the price of the security.
• B) The formula for the current yield is identical to the formula describing the yield to maturity for a discount bond.
• C) The current yield is always a poor approximation for the yield to maturity.
• D) All of the above are true.
• E) Only A and B of the above are true.

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Definitions:

Real Assets

Physical or tangible assets that have value due to their substance and properties, such as land, buildings, and machinery.

Commercial Banks

Financial institutions that offer a wide range of banking services to individuals and businesses, including deposit accounts, loans, and other services.

Efficient Market

A market in which asset prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Investment Strategy

A plan for allocating assets among various investment types to achieve specific financial goals, taking into account the investor's risk tolerance and time horizon.