Financial Markets

Multiple Choice

Smart investors need to understand the distinction between the YIELD TO MATURITY on a financial asset and its RETURN RATE (or its rate of return) because

  • the yield to maturity assumes a financial asset will be held to maturity, whereas the return rate can be calculated for any holding period. 
  • the yield to maturity ignores capital gain or loss that might occur to an investor who sells a financial asset prior to its maturity. 
  • the yield to maturity ignores all payments received on a financial asset other than capital gain or loss whereas the return rate takes all payments into account. 
  • all of the above. 
  • only A and B. 
 

Diskussion