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Basic Question 0 of 6

The current yield on a 6%, 10-year bond is 6.7%, and the yield to maturity is 7.5%. Why is there such a discrepancy between the two rates?

A. The current yield considers all coupons and their timing while the yield to maturity does not.
B. The yield to maturity considers all coupons and their timing while the current yield does not.
C. The yield to maturity considers all coupons, capital gains/losses and the reinvestment income while the current yield only considers coupons.

User Contributed Comments 4

User Comment
tlydon007 I don't understand this.

Current Yield < YTM
&
Current Yield < Coupon Rate

Is that mathematically possible?
Inaganti6 Tell them what they want to hear.
khalifa92 lol
agaller Coupon rate = 6%
Current Yield = 6.7%
YTM = 7.5%

Coupon<Current<YTM
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Andrea Schildbach

Andrea Schildbach

Learning Outcome Statements

compare, calculate, and interpret yield and yield spread measures for fixed-rate bonds

CFA® 2025 Level I Curriculum, Volume 4, Module 7.