Question: Yield to matunity ( Y M ) is the rate of return expected from a bond held until its maturity date. However, the YiM equals

Yield to matunity

(\frac{Y}{M})

is the rate of return expected from a bond held until its maturity date. However, the YiM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions?

The bond is callable.

The probability of default is zero.

Yield to matunity (YM) is the rate of return expected from

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!

8. Bond yields Aa Aa E Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond's yield. A...

Bond yields Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond's yield. A bond's yield to...

Coupon payments are fixed, but the percentage retum that investors-recelve varies based on market coniditions. This percentage return is referred to as the bond's yield. Vield to maturity (YTM) is...

Coupon payments are fixed, but the percentage return that investors recelve varies based on market conditions. This percentage return is referred to is the bond's yield. field to maturity (YTM) is...

A bond's yield to maturity (TN) refers to the rate of return expected from a bond held until its matunty date. However, the YIM na an investor's expected rate of return under certain assumptions....

as the bond's yield. A bond's yield to maturity (YTM) refers to the rate of return expected from a bond held until its maturity date. However, the YTM equals an investor's expected rate of return...

Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond's yield. Vield to maturity (YTM) is...

PLEASE ASNWER ALL!!! type answers clearly! thank you so much!! For example, assume Oliva wants to eam a return of 12.25% and is offered the opportunity to purchase a $1,000 par value bond that pays a...

8. Bond yields Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bonds yield. A bonds yield...

Coupon payments are fixed, but the percentage return that investors receive varles based on market conditions. This percentage return is referred to as the bond's yield A bond's yield to maturity...

How would your answer to question 5 change if: Technological improvements reduce the cost of new BG production facilities by 3 percent per year? Thus a new plant built in year 1 would cost only 25...

An investigator is interested in the distribution of weights at a convention of runners. He draws three samples, each sample containing 16 runners. The mean weights were x = 152, X = 156 and X3 =...

The goal is to create a simplified analysis ( no tax considerations ) so this project is to create a spreadsheet that tracks and compares the cash flows on a monthly basis for two scenarios 1 )...

A company issues 1,050 shares of its common stock for $33,600 cash. Prepare journal entries to record this event under each of the following separate situations.