The Yield to Maturity Is The

question 97

Multiple Choice

The yield to maturity is the:

• A)discount rate that equates a bond's price with the present value of the bond's future cash flows.
• B)rate you will earn if your bond is called on the earliest possible date.
• C)rate computed by dividing the annual interest by the par value.
• D)rate used to compute the amount of each interest payment.
• E)rate computed as the annual interest divided by the market value.

---

Definitions:

Standard Deviation

An indicator of the degree of spread or variability among a collection of numbers.

Variance

A measure of the dispersion of a set of data points around their mean; shows how much the data vary from the average.

Binomial Distribution

A probability distribution that summarizes the likelihood of a variable to take one of two independent values under a given number of iterations.

Distribution of X

Refers to the way values of the variable X are spread or distributed across possible outcomes, showing the frequency of each value.