The __________ is the interest rate that makes the sum of present values for all future payments equal to a security's purchase price.
A) yield to maturity
B) current yield
C) coupon rate
D) capital gain

Question

Quizplus · Accepted Answer

The yield to maturity is the interest rate that equates the current market price of a security to the present value of all its future cash flows, including both interest payments and the return of principal at maturity. It takes into account the price paid for the security, the coupon rate, the length of time until maturity, and the face value of the security.

The __________ Is the Interest Rate That Makes the Sum