The total expected future yield on a bond consists of a(n)____ yield which is usually positive and a(n)____ yield which can be positive or negative.
A) current;interest
B) capital gain;current
C) interest;current
D) interest;capital gain

Question

Quizplus · Accepted Answer

The expected future yield on a bond consists of two components - interest yield and capital gain/loss yield. The interest yield is the expected return on the principal value of the bond while the capital gain/loss yield is the expected return from any appreciation or depreciation in the market value of the bond. Since the question is asking for the two components of the total expected future yield, the answer is D - interest yield and capital gain yield.

The Total Expected Future Yield on a Bond Consists of A(n)____