Quiz Ch 06 – Understating Total Return for Discount Bonds

Fundamentals of Corporate Finance

Brealey, Myers, and Marcus

10th Edition

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Why does the current yield typically provide a lower estimate of a bond's total return when the bond is sold at a discount?

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  • Search Terms: a) a because: bond bond's current discount each face for have higher in increase increases interest may nominal only price rates return returns. d) sells show tends the to total understate value. when will year. c) yield yield. b) yields
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