Which one of the following statements is NOT true of realized yield?
A) The realized yield is the return earned on a bond given the cash flows actually received by the investor.
B) The realized yield is equal to the yield to maturity even if the bond is sold prior to maturity.
C) It is the interest rate at which the present value of the actual cash flows generated by the investment equals the bond's price at the time of sale of the bond.
D) All of the above are true.

Question

Quizplus · Accepted Answer

The statement "the realized yield is equal to the yield to maturity even if the bond is sold prior to maturity" is not always true. If the bond is sold prior to maturity, the realized yield may be different from the yield to maturity due to the difference in the cash flows received by the investor.

Which One of the Following Statements Is NOT True of Realized