The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the ________ when approximating the yield for a coupon bond.
A)current yield
B)discount yield
C)future yield
D)star yield

Question

Quizplus · Accepted Answer

The yield to maturity for a perpetuity, when used as an approximation for the yield to maturity on long-term coupon bonds, is referred to as the current yield. This is because the current yield formula, which divides the annual coupon payments by the bond's current market price, provides a simple approximation that becomes more accurate for bonds with longer maturities.

The Yield to Maturity for a Perpetuity Is a Useful