Canadian Securities Course (CSC) Practice Exam · Question
The yield to maturity (YTM) of a bond is:
Yield to maturity (YTM) is the total return an investor anticipates earning if they hold the bond until it matures, taking into account the purchase price, par
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Question: The yield to maturity (YTM) of a bond is:
Answer options:
- The annual coupon payment divided by the bond's face value.
- The annual interest payment on a bond. ✅ The total return an investor will receive if they hold the bond until maturity.
- The return an investor receives if they sell the bond before maturity.
Correct answer: The total return an investor will receive if they hold the bond until maturity.
Explanation: Yield to maturity (YTM) is the total return an investor anticipates earning if they hold the bond until it matures, taking into account the purchase price, par value, coupon interest rate, and time to maturity.
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