Which One of the Following Statements Is True of a Bond's

question 74

Multiple Choice

Which one of the following statements is true of a bond's yield to maturity?

• A) The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond.
• B) It is the annual yield that the investor earns if the bond is held to maturity, and all the coupon and principal payments are made as promised.
• C) A bond's yield to maturity changes daily as interest rates increase or decrease.
• D) All of the above are true.