The most widely used measure of interest rates in bond markets is the
A) coupon rate.
B) discount rate.
C) yield to maturity.
D) current yield.

Question

Quizplus · Accepted Answer

The yield to maturity takes into account the current market price of the bond, the future coupon payments, and the final principal repayment to calculate the overall return an investor will receive if they hold the bond until maturity. It is therefore considered the most accurate measure of the interest rate on a bond. The coupon rate is simply the fixed annual interest payment divided by the face value of the bond and does not reflect changes in market conditions. The discount rate and current yield are also used in bond markets, but they are not as widely used or as comprehensive as the yield to maturity.

The Most Widely Used Measure of Interest Rates in Bond