A bond's yield to maturity (YTM) rate is the rate of return you receive if you hold a bond until it matures and reinvest all the interest payments at the YTM rate. What factors determine the YTM of a bond?
A)A bond's term to maturity.
B)Uncertainty in price.
C)Risk.
D)All of the above.

Question

Quizplus · Accepted Answer

The yield to a bond depends on all of these factors: a bond's term to maturity, the time between its issue date and its maturity date, uncertainty in price, inflation, and risk. Therefore, different bonds have different yields.
Key Takeaway: Depending on different values of different bonds, there are some variants of YTM:
- Yield to call: It is calculated similarly with YTM but when a bond is callable, the cash flow is shortened.
- Yield to put: It is the same as yield to call, but the bond holder has the option to sell the bond back to the issuer at a fixed price on a specified date.
- Yield to worst: It is the lowest yield of all kinds, when the bond is callable or exchangeable.

A Bond's Yield to Maturity (YTM) Rate Is the Rate