Current yield may be shown in yield advertisements only if the yield to maturity is also shown.

• A. True
• B. False
• C. Only if the bond is municipal notes
• D. Not allowed

Answer: (A)

Presenting yields in advertising must give a complete picture. If you quote current yield in a yield advertisement, you’re required to also disclose yield to maturity. Current yield shows only the income relative to price (a snapshot) and can be misleading about the total return because it doesn’t account for price changes or reinvestment of coupons. Yield to maturity, on the other hand, represents the total return if the security is held to its maturity, assuming all coupons are reinvested at a similar rate. Requiring the yield to maturity alongside the current yield ensures investors see both the income rate and the overall return, preventing a misleading emphasis on a single figure. So the statement is true, and the rule applies broadly to municipal securities, not just notes, and it does not prohibit showing current yield as long as yield to maturity is also shown.