A bond's internal rate of return is also known as its:
A) coupon.
B) payback period.
C) duration.
D) yield to maturity.

Question

Quizplus · Accepted Answer

The internal rate of return of a bond is the yield to maturity. The yield to maturity is the total return anticipated on a bond if the bond is held until it matures and all interest payments are reinvested at the same rate. Therefore, choice D is correct.

A bond's coupon is the interest rate that the bond pays annually, and it is a fixed percentage of the bond's face value. The payback period is the length of time it takes an investment to generate enough cash inflows to recover its initial cost. Duration is a measure of a bond's sensitivity to changes in interest rates.

A Bond's Internal Rate of Return Is Also Known as Its