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?
- The annual inflation rate will remain constant.
- The issuer will default on the final payment.
- The bond is sold before its maturity date.
- All coupons are reinvested at the YTM rate.
Sign up free to see the explanation and track your rank →
More Principles of Finance valuation practice
- What is its current market price?
- What is its Modified Duration?
- If the current market yield for similar risk bonds is 8%, the bond will trade at:
- If the market yield to maturity (YTM) suddenly increases to 5.5%, what will happen to the
- If the stock price is 35 at expiration, what is the net profit?
- If the current market interest rate for similar bonds is 6%, how will the bond be priced i
- What is the current market price of the bond?
- A 5-year zero-coupon bond with a face value of 1,000 is curr… — What is the yield to matur