Question

The rate of return is equal to ___________.a. the coupon rate plus the current yield.b. the current yield plus the rate of capital gains.c. the coupon rate plus the rate of capital gains. d. the coupon rate multiplied by the rate of capital gains.

Answer 1

Answer:

b. the current yield plus the rate of capital gains.

Explanation:

The rate of return is equal to the current yield plus the rate of capital gains. Rate of return on an investment is equal to the net gain or loss on that investment over a specified period of time compared to the initial investment cost and it is usually expressed in percentage. Thus the rate of return on a coupon is the current yield plus the rate of capital gains.