The yield to maturity is the discount rate that equates the present value of the interest and principal payments with the current market price of the bond.

Question

Quizplus · Accepted Answer

This statement correctly defines yield to maturity, which is the rate of return an investor would receive if they held the bond until maturity and received all interest and principal payments as scheduled. In order to calculate yield to maturity, the present value of these payments must be equal to the bond's current market price.

The Yield to Maturity Is the Discount Rate That Equates