QUESTION 4 Assume you buy a bond, hold it until it matures, and the issuer makes

Question

QUESTION 4

Assume you buy a bond, hold it until it matures, and the issuer makes all payments. Your return on the bond will

depend on changes in market rates over the holding period

always be the original yield to maturity from the purchase date

always be the current yield from the purchase date

always be the coupon percentage

depend on changes in market rates over the holding period

always be the original yield to maturity from the purchase date

always be the current yield from the purchase date

always be the coupon percentage

Explanation / Answer

Yield to maturity is the total return earned by the investor by purchasing bond and held till maturity of the bond. It does not change during the life time of the bond.

Hence, correct option is always be the original yield to maturity from the purchase date.

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