Asked by Ken Xiao Xinhua on Apr 24, 2024
Verified
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.
Verified Answer
SS
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.
Learning Objectives
- Acquire an understanding of how yield to maturity affects bond prices and investment yields.