SIE practice questionmediumCallable Bonds
If a bond is called before maturity, which yield calculation becomes most relevant to the investor?
- ACurrent yield
- BCoupon rate
- CYield to maturity
- DYield to call✓ Correct answer
Explanation
Why D — Yield to call
Yield to call shows return if the bond is called early. Current yield and coupon rate ignore call features; yield to maturity assumes holding to maturity, so it's irrelevant if called.
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