SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 39: Answer and Explanation

Question: 39

Which of the following measures of bond interest is determined when the bonds are issued?

• A. Yield to maturity
• B. Yield to call
• C. Nominal yield
• D. Current yield

Correct Answer: C

Explanation:

C: Choice C is correct because the nominal yield or coupon rate is stated as a percentage of the face amount when the bonds are issued. Choices A, B, and D compare the nominal yield with the price paid, averaged over the period of time to maturity or time to call, or merely the price paid.