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Yield to maturity (YTM) is best described as the total return an investor earns if the bond is:
a.Sold immediately at the current market price
b.Held until maturity, with coupons reinvested, accounting for any premium or discount
c.Called by the issuer on the first call date
d.Converted into common stock
Giải thích
YTM measures the total annualized return assuming the bond is held to maturity and coupons are reinvested at the YTM, incorporating any gain or loss from a discount or premium price. It is not the return from an immediate sale, an early call (that is yield to call), or conversion.
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Câu hỏi liên quan cùng chủ đề
- A bond trading at a price below its par value is said to be trading at:
- A bond has a 6% coupon and is currently priced at $1,200 (a premium). Its current yield is:
- For a bond purchased at a discount, which of the following relationships is correct?
- If a bond's current yield is 5% and its coupon rate is 5%, the bond is most likely trading at:
- Two bonds are identical except for maturity. Which bond's price will generally change MORE for a given change in interest rates?
- An investor buys a bond at par with a 4% coupon. If market rates later drop to 2%, the market value of the investor's bond will most likely:
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