medium · Principles of Finance valuation

What is a primary assumption of the yield to maturity calculation that may lead to it being an unrealistic measure of an investor's actual realized return?

  1. The annual inflation rate will remain constant.
  2. The issuer will default on the final payment.
  3. The bond is sold before its maturity date.
  4. All coupons are reinvested at the YTM rate.

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