For healthy firms,the expected return on their bonds is close to their yield to maturity.

Question

Quizplus · Accepted Answer

For healthy firms, the expected return on their bonds is close to their yield to maturity because investors have confidence in the firm's ability to meet its debt obligations, resulting in low default risk. Therefore, the market price of the bond is not significantly affected by changes in interest rates or other market conditions, and the bond's yield to maturity provides an accurate estimate of its expected return.

For Healthy Firms,the Expected Return on Their Bonds Is Close