Ace the Canadian Securities Course 2025 - Rock the CSC Practice Exam!

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What does the current yield of a bond represent?

The bond's price at issuance

The yield at maturity

The annual dollar amount of interest

The current yield of a bond represents the annual dollar amount of interest that the bond will pay based on its current price. This is different from the yield at maturity, which is the total return an investor will receive if they hold the bond until it reaches maturity. The bond's price at issuance and the duration of the bond are not directly related to its current yield, as the bond's price can fluctuate and the duration is a measure of the bond's sensitivity to interest rate changes. Therefore, option C is the most accurate representation of the current yield of a bond.

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The duration of the bond

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