The rate of return is equal to the
A) sum of the coupon rate and the current yield.
B) yield to maturity.
C) sum of the current yield and the actual rate of capital gain or loss.
D) sum of the current yield and the expected rate of capital gain.

Question

Quizplus · Accepted Answer

The rate of return on a bond investment is equal to the sum of the current yield (annual interest payment divided by current market price) and the actual capital gain or loss at maturity. This is because the current yield provides the annual income from the investment, while the capital gain or loss reflects the change in the market price of the bond over time. Therefore, the correct choice is C, which reflects this formula accurately.

The Rate of Return Is Equal to the