Asked by Ken Xiao Xinhua on Apr 24, 2024

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The rate of return earned by an investor who purchases a bond today and holds it for the remainder of the term is called the:

A) Coupon rate.
B) Compound rate.
C) Yield to market.
D) Yield to call.
E) Yield to maturity.

Yield to Maturity

The total return anticipated on a bond if it is held until it matures, incorporating all coupon payments and the face value received at maturity.

Coupon Rate

The interest payment per annum on a bond, depicted as a percentage of its face value.

  • Acquire an understanding of how yield to maturity affects bond prices and investment yields.
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Sanil Sunny7 days ago
Final Answer :
E
Explanation :
Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. It includes all interest payments and the repayment of the principal, taking into account the time value of money.