Match each debt security yield or valuation term on the left with its corresponding definition on the right.
- Nominal YieldThe stated annual interest rate printed on the bond certificate, calculated as a fixed percentage of face value.
- Current YieldThe annual interest payment divided by the bond's current secondary market price.
- Yield to Maturity (YTM)The total anticipated annual rate of return earned by an investor who purchases a bond at market price and holds it until redemption.
- Par ValueThe principal amount of a bond that the issuer agrees to repay the bondholder at maturity, typically $1,000 for corporate bonds.
Answer
Nominal Yield matches the stated coupon rate percentage on face value; Current Yield matches annual interest divided by current secondary market price; Yield to Maturity matches the total rate of return earned if held until redemption; Par Value matches the principal amount returned at maturity.
Each debt structural term corresponds directly to its standard SIE exam definition: Nominal Yield is the stated coupon rate, Current Yield is annual interest divided by market price, Yield to Maturity represents full holding-period return to redemption, and Par Value is the principal face amount.
Step-by-Step Solution
Key Concept
Bond Yield Measures and Valuation Fundamentals
Estimated Time:50s