The yield-to-maturity of a Treasury security is calculated using the bid price or the ask price. The yield-to-maturity using the bid price will be ________ than the yield-to-maturity using the ask price.

Question

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The yield-to-maturity (YTM) of a bond is inversely related to its price. Since the bid price (the price at which the dealer is willing to buy) is lower than the ask price (the price at which the dealer is willing to sell), calculating YTM using the bid price will result in a higher yield compared to using the ask price.

The Yield-To-Maturity of a Treasury Security Is Calculated Using the Bid