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:

Funder and Colvin

Psychologists who proposed the Realistic Accuracy Model (RAM) of personality judgment, emphasizing the importance of accurate observations for making precise evaluations about others.

Power of the Situation

The concept that the environment or situational context can strongly influence individuals' behavior, often more than their personal traits.

Interaction

The process by which two or more entities influence each other's actions; in social contexts, it involves communication and behavior among individuals or groups.

Relaxed

A state or condition of being free from tension and anxiety.