Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
How does a bond’s current yield differ from its total return?
Expert Solution
Step 1: Introduction
A bond is a debt financial instrument issued by governments or corporations to raise capital from the investors. The bond provides a return to the investors at a fixed rate. The return in the form of interest to bondholders is the yield that is given periodically.
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