The yield to maturity (YTM) of a bond is the internal rate of return (IRR) earned by an investor who buys the bond today and holds it until maturity. In other words, YTM is the total return anticipated on a bond if it is held until it matures.

Here's how to determine whether the YTM is more or less than the coupon rate:

1. Compare the bond's current price to its face value. If the current price is less than the face value, the YTM is more than the coupon rate. If the current price is more than the face value, the YTM is less than the coupon rate.

2. In this case, the bond's current price ($928.09) is less than its face value ($1000).

Therefore, the yield to maturity will be more than the coupon rate of 10%.

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The yield to maturity (YTM) of a bond is the internal rate of return (IRR) earned by an investor who buys the bond today and holds it until maturity. In other words, YTM is the total return anticipated on a bond if it is held until it matures.

Here's how to determine whether the YTM is more or less than the coupon rate:

1. Compare the bond's current price to its face value. If the current price is less than the face value, the YTM is more than the coupon rate. If the current price is more than the face value, the YTM is less than the coupon rate.

2. In this case, the bond's current price ($928.09) is less than its face value ($1000).

Therefore, the yield to maturity will be more than the coupon rate of 10%.

Knowee AI · Accepted Answer

The yield to maturity (YTM) of a bond is the internal rate of return (IRR) earned by an investor who buys the bond today and holds it until maturity. In other words, YTM is the total return anticipated on a bond if it is held until it matures.

Here's how to determine whether the YTM is more or less than the coupon rate:

1. Compare the bond's current price to its face value. If the current price is less than the face value, the YTM is more than the coupon rate. If the current price is more than the face value, the YTM is less than the coupon rate.

2. In this case, the bond's current price ($928.09) is less than its face value ($1000).

Therefore, the yield to maturity will be more than the coupon rate of 10%.

YTM with annual coupons ◼ Consider a bond with a 10% annual coupon rate, 15 years to maturity and a face value of $1000. The current price is $928.09. – Will the yield to maturity be more or less than 10%?

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