What Is a Bond's Current Yield? How Does the Current

question 66

Essay

What is a bond's current yield? How does the current yield differ from the yield to maturity and what determines how close the two values are?

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Definitions:

CCA Rate

The Capital Cost Allowance rate refers to the annual depreciation rate that is applicable for tax purposes on a depreciable asset, allowing businesses to write off a portion of the asset's cost over its useful life.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value after accounting for taxes.

Depreciation Tax Shield

A reduction in taxable income resulting from the allowance for depreciation expenses on assets.