The Yield to Maturity Is

question 9

Multiple Choice

The yield to maturity is:

• A)the rate that equates the price of the bond with the discounted cash flows.
• B)the expected rate to be earned if held to maturity.
• C)the rate that is used to determine the market price of the bond.
• D)equal to the current yield for bonds priced at par.
• E)All of the above.

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Definitions:

Residual Value

The estimated value that an asset is expected to have at the end of its useful life, after depreciation has been taken into account.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.

Average Rate

The mean price or value of a commodity or service over a given period or in a given market.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.