Question

Question 17

Which one of the following terms refers to a bond's rate of return that is required by the market place?

a. Coupon rate

b. Yield to maturity

c. Discount yield

d. Maturity discount

e. Face rate

Answer 1

The coupon rate is a fixed payments made by the company at the end of a period. These are required returns for when the bond is issued. Discount rate, maturity discount, and fave rate do not make sense to the given question .The yield to maturity is used to define the required return on a bond by the market place. This rate matches the rate that is expected for that class of the bond. Hence, the following option is correct-

B. Yield to maturity.

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