SIE practice questionmediumYield to Maturity (YTM)
An investor buys a 5% bond at 95, with 5 years to maturity. Which yield will be highest?
- ACoupon rate
- BCurrent yield
- CYield to maturity✓ Correct answer
- DYield to call
Explanation
Why C — Yield to maturity
Buying at a discount, YTM is higher than both the coupon rate and current yield. Yield to call could be higher or lower, but without a call feature described, YTM is the highest among the given choices.
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