Why Should Many Investors Be Cautious When Relying on Yield

question 62

Essay

Why should many investors be cautious when relying on yield to maturity? Is it a convenient measure of rate of return for investors who might not hold their bonds to maturity?

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Definitions:

Ledger Account

A record that keeps track of all the financial transactions pertaining to a specific account, forming part of the general ledger.

Transactions

The actions carried out between two or more parties that involve the exchange of goods, services, or financial assets.

Accounts Payable

Liabilities or money owed to suppliers or creditors for goods and services received but not yet paid for.

Service Revenue

Income earned by a company for the services it has provided to its customers.