This is simply the percentage of interest to be paid on the bond periodically.a.Nominal Yieldb.Realized Yieldc.Yield to calld.Current Yield
Question
This is simply the percentage of interest to be paid on the bond periodically.
- a. Nominal Yield
- b. Realized Yield
- c. Yield to call
- d. Current Yield
Solution
To determine the periodic interest paid on a bond, the correct term among the provided options is Current Yield.
Explanation:
- Nominal Yield: This is the interest rate stated on the bond, usually expressed as a percentage of the face value, but does not take into account the price paid for the bond.
- Realized Yield: This reflects the actual return on an investment, taking into account the income received and any capital gains or losses, often over a specific holding period.
- Yield to Call: This calculates the yield of a bond if it is called before maturity at the specified call date. This is useful for callable bonds.
- Current Yield: This is calculated by taking the annual coupon payment divided by the current market price of the bond, representing the income as a percentage of the purchase price.
Thus, for periodic interest, the Current Yield accurately represents the interest to be paid on the bond periodically based on its current price.
Similar Questions
f the yield to maturity on an annual-pay bond is 7.75%, the bond-equivalent yield is closest to:A.8.05%.B.7.90%.C.7.61%.
The discount rate that makes the present value of a bond's payments equal to its price is termed the
The rate at which bonds pay semi-annual interest payments to the bond holders is the:Group of answer choicesGrowth RateCoupon RateDiscount RateMarket Rate
It is a loan taken at a certain rate of interest for a definite time period and repaid on maturity.a.Bondsb.Notes payablec.Interest payabled.Taxes payable
The amount of money that would have to be invested today at a given interest rate overa specified period in order to equal a future amount is called
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.