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      Question

      Which of the following correctly defines Yield to

      maturity (YTM)?
      A The rate of coupon earned to current bond price Correct Answer Incorrect Answer
      B The difference between the current price and face value of bond Correct Answer Incorrect Answer
      C The difference between the current yield of bond and the 10-year bond yield Correct Answer Incorrect Answer
      D The rate at which current bond price is equal to present value of all future cash flows Correct Answer Incorrect Answer
      E The rate at which the face value of bond is equal to present value of all future cash flows Correct Answer Incorrect Answer

      Solution

      The rate at which current bond price is equal to present value of all future cash flows is called Yield to Maturity.

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