The nearer a bond's price is to its par value and the longer the maturity of the bond,the more closely the ________ approximates the ________.

Question

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The current yield is the annual interest payment divided by the current market price of the bond. The yield to maturity is the annual rate of return an investor will receive if they hold the bond until maturity. The closer a bond's price is to its par value, the lower the current yield will be. The longer the maturity of the bond, the higher the yield to maturity will be. Therefore, the closer a bond's price is to its par value and the longer the maturity of the bond, the more closely the current yield will approximate the yield to maturity.

The Nearer a Bond's Price Is to Its Par Value