A bond's yield to maturity takes into consideration:
A) current yield but not price changes of a bond.
B) price changes but not current yield of a bond.
C) both current yield and price changes of a bond.
D) neither current yield nor price changes of a bond.

Question

Quizplus · Accepted Answer

The yield to maturity of a bond takes into consideration both the current yield (annual interest payments divided by the bond's current price) and any price changes expected over the bond's remaining life. Therefore, choice C is correct. Choices A and B are incorrect as each only considers one of the two factors. Choice D is also incorrect as yield to maturity is a measure used to assess the total return on a bond, and both current yield and price changes affect the bond's return.

A Bond's Yield to Maturity Takes into Consideration