Question

Which of the following statements are correct concerning yield-to-maturity (YTM)?

I. YTM considers both interest income and price appreciation.
II. YTM assumes the bond is called at the earliest possible date.
III. YTM is a compounded rate of return.
IV. YTM assumes all interest payments are reinvested at the YTM rate.
A) I and IV only
B) I, III and IV only
C) II, III and IV only
D) I, II and III only

Answer 1

I. YTM considers both interest income and price appreciation.

and

III. YTM is a compounded rate of return.

and

IV. YTM assumes all interest payments are reinvested at the