The sum of the current yield and the rate of capital gain is called the
A)rate of return.
B)discount yield.
C)perpetuity yield.
D)par value.

Question

Quizplus · Accepted Answer

The sum of the current yield (annual income generated by the investment) and the rate of capital gain (the change in asset price over time) is known as the rate of return. Therefore, option A is the correct choice. Option B is incorrect because the discount yield is the yield stated as a percentage of the par value of the security, not the sum of current yield and rate of capital gain. Option C is incorrect because perpetuity yield is the rate of return generated by an investment that makes an infinite series of regular payments. Option D is also incorrect because par value is the face value of a bond, and it does not relate to the sum of current yield and rate of capital gain.

The Sum of the Current Yield and the Rate of Capital