The current yield is
A)always equal to the yield to maturity on a coupon bond.
B)always equal to the coupon rate on a coupon bond.
C)roughly equal to the yield to maturity on very long-term bonds.
D)roughly equal to the yield to maturity on a short-term bond.

Question

Quizplus · Accepted Answer

The current yield is roughly equal to the yield to maturity on a short-term bond. This is because the current yield measures the annual interest payment relative to the current market price of the bond, while the yield to maturity takes into account the present value of all coupon payments and the final principal payment at maturity. Short-term bonds have fewer coupon payments and a shorter time to maturity, making the current yield and yield to maturity more closely aligned.

The Current Yield Is