The yield to maturity of a bond is the same rate as ________.
A) the coupon rate
B) the effective rate of interest
C) the nominal interest rate
D) the internal rate of return

Question

Quizplus · Accepted Answer

The yield to maturity of a bond is the rate of return that an investor would earn if the bond is held until maturity. It takes into account the current market price of the bond, the face value of the bond, and the coupon payments received by the investor over the life of the bond. The yield to maturity is calculated using the internal rate of return, which is the discount rate that makes the present value of all future cash flows from the bond equal to its current market price. Therefore, the yield to maturity is the same rate as the internal rate of return.

The Yield to Maturity of a Bond Is the Same