Question: please answer the question in about 2 paragraphs The yield-to-maturity (yield) of a bond is its return if you purchase it in the secondary market

please answer the question in about 2 paragraphs
The yield-to-maturity (yield) of a bond is its return if you purchase it in the secondary market and hold it until it matures. So for example, if you bought a bond for $100 and its yield to maturity is 5%, then when the bond matures you get $105 back. Lets pretend we have two bonds. Bond A has a yield-to-maturity of 9% while Bond B has a yield-to-maturity of 2%. What are some reasons why Bond Bs yield is lower than Bond A? Hint: it has to do with types of risk.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!