Bond A has a current yield of 6% and Bond B has a current yield of 8%.If the market price of both bonds is the same,then the yield to maturity on Bond B must be higher than the yield to maturity on Bond A.

Question

Quizplus · Accepted Answer

The current yield only accounts for the annual interest payment relative to the bond's price; it does not account for differences in the bonds' maturity dates, coupon rates, or how these factors affect the yield to maturity. Bond B could have a higher current yield but a similar or lower yield to maturity than Bond A depending on these other factors.

Bond a Has a Current Yield of 6% and Bond