Question

Which of the following statements about the yield to maturity on bonds is CORRECT?

	A.	The yield to maturity on a bond may change according to the market conditions.
	B.	The yield to maturity on a bond will be mentioned in the bond security and remain constant throughout the life of the bond.
	C.	The yield to maturity determines how much interest payment will be made to the bondholders.
	D.	The yield to maturity will always be equal to the coupon rate.
	E.	The yield to maturity should be lower for bonds with higher default risk.

Answer 1

Correct Answer is option A
YTM on a bond may change according to the market conditions.
YTM on a bond change due to demand and suuply of the bond, demand and supply determine by the change in market conditions.
YTM of a bond is higher if the bonds have a higher default risk.
YTM of a bond is equal to Coupon rate when bond is trade at par. YTM of bond not always equal to Voupon rate of bond.
YTM of bond is changing from time to time by the demand and supply of bonds, they can't remain same at throughtout the period.

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