Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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The current yield on a bond fund refers to
  1. the percentage increase in the fund’s net asset value.
  2. the return that the fund earned because of the capital appreciation of the securities in the fund.
  3. the total return that the fund has earned over the most recent 12 month period.
  4. the return that the fund earned based only on the interest income it received
Explanation
Answer: D - The current yield on a bond fund is the return that the fund earned from interest income only. The return from interest income plus the return due to the capital appreciation of the securities make up the total return earned by the fund. The investor’s total return is equal to the return on the income received from the fund plus any change in the net asset value of the fund.
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