The yield-to-maturity (ytm)is the
A)Return on the bond at maturity.
B)The coupon rate on the bond.
C)The internal rate of return of the bond.
D)The coupon rate divided by the current price of the bond.

Question

Quizplus · Accepted Answer

Yield-to-maturity (YTM) is defined as the internal rate of return of the bond, meaning the rate that equates the sum of present value of all cash flows from the bond to its current market price. It takes into account the bond's current price, interest rate, coupon rate, time to maturity, and the face value of the bond. Therefore, option C is the correct answer. Options A and B are not correct because they do not consider the current market price of the bond, which is an important component of YTM. Option D is incorrect because it refers to the yield-to-price ratio, which is not the same as YTM.

The Yield-To-Maturity (Ytm)is the