The ________ measure is similar to the yield to maturity measure for bonds.

Question

Quizplus · Accepted Answer

The yield to maturity measure for bonds calculates the rate of return on a bond if it is held until maturity and all interest payments are reinvested at the same rate. Similarly, the internal rate of return (IRR) measures the rate of return on an investment if all cash flows are reinvested at the same rate. Therefore, B is the correct answer. NPV measures the net present value of cash flows, MIRR measures the rate of return on an investment assuming all cash flows are reinvested at a certain rate different from the project's internal rate of return, and payback measures the time required to recoup the cost of an investment. None of these measures are directly comparable to the yield to maturity measure for bonds.

The ________ Measure Is Similar to the Yield to Maturity