Which of the following is the best definition of "realized compound yield"?
A) The yield an investor realizes on the bond coupons.
B) The total amount of the coupon and principal payments.
C) The ending wealth divided by the starting wealth.
D) The total amount of the coupon and principal payments, and the reinvestment of these flows.

Question

Which of the following is the best definition of "realized compound yield"? 
A) The yield an investor realizes on the bond coupons.
B) The total amount of the coupon and principal payments.
C) The ending wealth divided by the starting wealth.
D) The total amount of the coupon and principal payments, and the reinvestment of these flows.

Quizplus · Accepted Answer

Realized compound yield takes into account the reinvestment of both coupon and principal payments, making option D the best definition. Option A only considers bond coupons, option B only includes total payments without reinvestment, and option C is not related to bond yields.

Which of the Following Is the Best Definition of "Realized