Bond yields are typically stated as an annual rate of return and assume the bond is purchased today and held until maturity. Option A is incorrect because bond yields are not quoted as an average monthly rate of return. Option B is incorrect because it assumes the bond is sold after one year, while many bonds have longer maturities. Option C is incorrect because it only applies if the bond is held to maturity, whereas many bonds are sold before maturity.

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Bond Yields Are

Question 61

Multiple Choice

Bond yields are

A) quoted as the average monthly rate of return and assume the bond is purchased today at the quoted price and held for twelve months.
B) quoted as annual rates of return and assume the bond is purchased today at the stated price and sold one year from today.
C) stated as a percentage of the maturity value and assume the bond is held to maturity.
D) stated as an annual rate of return and assume the bond is purchased today and held until maturity.

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