What Is the Relationship Between a Bondholder's Rate of Return

question 96

Multiple Choice

What is the relationship between a bondholder's rate of return and the bond's yield to maturity if he does not hold the bond until it matures?

• A) The rate of return will be lower than the yield to maturity.
• B) The rate of return will be higher than the yield to maturity.
• C) The rate of return will equal the yield to maturity.
• D) It could be higher or lower.

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Definitions:

Mastoid Process

A bony prominence located behind the ear, part of the temporal bone, and serves as an attachment point for muscles.

Mandibular Fossa

A depression in the temporal bone of the skull that articulates with the mandible (jawbone), allowing the jaw to open and close.

Transverse Foramina

Openings in the transverse processes of cervical vertebrae through which the vertebral arteries pass to supply blood to the brain.

Costal Cartilage

The cartilage segments that connect the ribs to the sternum, contributing to the elasticity and expansion capability of the rib cage.