If you purchase a 10 year bond today with the intention of selling it a year from today, you would like the yield to maturity to ____.

Question

Quizplus · Accepted Answer

If you intend to sell the bond before it reaches maturity, you are exposed to interest rate risk. If interest rates rise, the bond's market value will decline, leading to a loss if you sell it. Therefore, you would prefer the yield to maturity to decrease, as this indicates that interest rates have risen and the bond's market value has declined, allowing you to buy it back at a lower price and realizing a profit when you sell it.

If You Purchase a 10 Year Bond Today with the Intention