Asked by Elizabeth Carney on Jul 14, 2024
Verified
Suppose you open The National Post and see that 30-year Canada Bonds are yielding 8.5%. This is an example of ___________.
A) a real return
B) a nominal return
C) an inflation premium
D) a default risk premium
E) a taxability premium
Nominal Return
The rate of return on an investment without adjusting for inflation.
Yielding
The income produced by an investment, typically expressed as a percentage of the investment's cost.
Canada Bonds
Bonds issued by the Canadian government, offering a low-risk investment option with fixed interest payments.
- Comprehend the diverse risk premiums linked to investing in bonds.
Verified Answer
BS
Bhuvi SingalJul 15, 2024
Final Answer :
B
Explanation :
The yield on a 30-year Canada Bond represents a nominal return, as it does not account for inflation or other factors that might affect the real return on the investment.
Learning Objectives
- Comprehend the diverse risk premiums linked to investing in bonds.