Which of the following equations is used to compute the percentage rate of return on a bond?
A)Percentage rate of return on a bond = Current yield + Coupon rate of interest
B)Percentage rate of return on a bond = Current yield + Capital gains yield
C)Percentage rate of return on a bond = Market return + Maturity value
D)Percentage rate of return on a bond = Market yield + Current yield
E)Percentage rate of return on a bond = Market yield + Capital gains yield

Question

Quizplus · Accepted Answer

The percentage rate of return on a bond is calculated using the current yield and the capital gains yield. The current yield is the annual coupon payment divided by the current market price of the bond, while the capital gains yield is the change in the bond's price over a given period of time. Therefore, option B is the correct equation for computing the percentage rate of return on a bond.

Which of the Following Equations Is Used to Compute the Percentage