Question

    What is the term used to describe the rate of return

    earned by an investor who purchases a bond and holds it until it matures?
    A Intrinsic Value Correct Answer Incorrect Answer
    B Coupon Rate Correct Answer Incorrect Answer
    C Redemption Value Correct Answer Incorrect Answer
    D YTM Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    The term used to describe the rate of return earned by an investor who purchases a bond and holds it until it matures is "Yield to Maturity (YTM)." The YTM is the total return anticipated on a bond if it is held until it matures, taking into account the bond's current market price, its face value, its coupon rate, and the time remaining until maturity.

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