The average rate of return earned on a callable bond if it is held until the first call date is the:
A)yield to call.
B)yield to market.
C)yield to principal price.
D)yield to issue price.
E)yield to maturity.

Question

Quizplus · Accepted Answer

The yield to call is the average rate of return earned on a callable bond if it is held until the first call date. It takes into account the call price and call date, which can affect the total return on the investment. The other options—yield to market, yield to principal price, yield to issue price, and yield to maturity—refer to different yield calculations for bonds that do not have an optionality feature like a call provision.

The Average Rate of Return Earned on a Callable Bond