The Current Yield on a Bond Is Measured by ________

question 124

Multiple Choice

The current yield on a bond is measured by ________.

• A) the annual interest payment divided by the current price
• B) the annual interest payment divided by the par value
• C) the annual interest payment divided by the maturity value
• D) the annual interest payment divided by the yield to maturity

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Financing Activities

Transactions and business events that affect long-term liabilities and equity of the company, such as issuing bonds or repaying bank loans.

Long-term Assets

Assets that are expected to provide economic benefits over a period longer than one fiscal year, such as land, buildings, and equipment.

Short-term Investments

Financial assets that are expected to be converted into cash or sold within a year.