Unless otherwise indicated,when economists or investors refer to the interest rate on a financial asset,they are referring to the
A) current yield.
B) coupon rate.
C) yield to maturity.
D) prime rate.

Question

Quizplus · Accepted Answer

When economists or investors refer to the interest rate on a financial asset, they are typically referring to the yield to maturity. This is the total return that an investor can expect to receive if they hold the asset until its maturity date, taking into account both the coupon rate and the price of the asset. The current yield only looks at the annual interest payment in relation to the current market price of the asset, while the coupon rate is simply the fixed rate of interest that the issuer of the bond has promised to pay. The prime rate is a benchmark interest rate that banks use to set their own lending rates, and is not necessarily tied to any specific financial asset.

Unless Otherwise Indicated,when Economists or Investors Refer to the Interest