Which of the following is a situation in which an investor will not receive the promised yield to maturity?
A)The investor holds the bond until maturity and reinvests coupon payments at the original yield to maturity.
B)Interest rates do not change during the life of the bond.
C)The issuer calls the bond prior to original maturity.
D)The realized compound yield equals the promised yield to maturity.

Question

Quizplus · Accepted Answer

If the issuer calls the bond prior to original maturity, the investor will not receive the promised yield to maturity since they will not receive all of the expected future cash flows.

Which of the Following Is a Situation in Which an Investor