For simple loans, the yield to maturity
A)is always less than the specified simple interest rate.
B)is always greater than the specified simple interest rate.
C)is always equal to the specified simple interest rate.
D)may be less than, greater than, or equal to the specified simple interest rate, depending on the maturity of the loan.

Question

Quizplus · Accepted Answer

For simple loans, the yield to maturity is always equal to the specified simple interest rate. This is because simple interest does not take compounding into account, and therefore the yield to maturity and the simple interest rate are the same.

For Simple Loans, the Yield to Maturity