What Does the Yield to Maturity on Bonds Refer To

question 28

Multiple Choice

What does the yield to maturity on bonds refer to?

• A)the number of years before the bond's maturity
• B)the amount of interest income received by investors each year
• C)the promised rate of return on the bonds if purchased at current price and held to maturity
• D)the capital gain that investors can get in relation to the average industry price of the bonds

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Definitions:

Levered Value

The value of a firm that includes the impact of borrowing on its overall valuation.

Cost of Equity

Cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk they undertake by investing their capital.

Debt-Equity Ratio

quantifies the proportion of a company's financing that comes from creditors and investors, showing the balance between debt (borrowed funds) and equity (shareholders' equity).

Targeted Cost

A cost management technique where a product's desired cost is set based on market conditions and desired profit, guiding design and production decisions.