Which of the Following Will Reduce the Yield to Maturity

question 35

Multiple Choice

Which of the following will reduce the yield to maturity from what the investor calculated at time of purchase?

• A) Increasing interest rates; bonds held to maturity
• B) Decreasing interest rates; bonds held to maturity
• C) Stable interest rates; bonds sold before maturity
• D) Increasing interest rates; bonds sold before maturity

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Definitions:

Expected Returns

The expected yield from an investment, considering the likelihood of different results.

Positive Variance

The difference between actual performance and expected performance where the actual outcome is more favorable than what was anticipated.

Weights

In finance, it refers to the proportion of each component's value in a portfolio or in a weighted average calculation.

Expected Return

The probable return on an investment, taking into account all possible outcomes or the aggregate return that an investor anticipates over a certain period.