Explain Why the Expected Return of a Corporate Bond Does

question 103

Essay

Explain why the expected return of a corporate bond does not equal its yield to maturity?

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Definitions:

Cost Curve

A graphical representation that shows the costs of production as a function of the total quantity produced.

Average Total Cost

The total cost of production divided by the number of goods produced; it's a method to calculate the cost per unit of production.

Average Variable Cost

The total variable costs (costs that change with production volume) divided by the quantity of output produced.

Diminishing Marginal Returns

A principle in economics where each additional unit of input results in a smaller increase in output than the previous unit, at a certain point.