{"id":54680,"date":"2024-04-16T00:14:18","date_gmt":"2024-04-16T00:14:18","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=54680"},"modified":"2024-04-16T00:14:18","modified_gmt":"2024-04-16T00:14:18","slug":"bonds-promised-rate-of-return-is-also-considered-as","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/bonds-promised-rate-of-return-is-also-considered-as\/","title":{"rendered":"Bond&#8217;s promised rate of return is also considered as"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a975d4ac136a\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    yield to earning                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    yield to investors                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    yield to maturity                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    yield to return                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>C. yield to maturity<\/strong><\/p>\n<p>The yield to maturity (YTM) is the rate of return an investor expects to earn on a bond if they hold it until maturity. It is calculated by taking the present value of all the bond&#8217;s future cash flows (coupon payments and principal repayment) and dividing it by the bond&#8217;s price.<\/p>\n<p>The yield to maturity is a more accurate measure of a bond&#8217;s return than the coupon rate, because it takes into account the time value of money. The coupon rate is simply the annual interest payment that the bond issuer makes to the bondholder. However, the coupon rate does not take <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> into account the fact that the bondholder will receive the coupon payments in the <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> future, and that the value of money decreases over time.<\/p>\n<p>The yield to maturity is also a more accurate measure of a bond&#8217;s return than the yield to call, which is the rate of return an investor expects to earn if they hold the bond until it is called by the issuer. The yield to call is calculated by taking the present value of all the bond&#8217;s future cash flows (coupon payments and principal repayment) and dividing it by the bond&#8217;s price, assuming that the bond will be called at the first call date.<\/p>\n<p>However, the yield to call is only an accurate measure of a bond&#8217;s return if the bond is actually called. If the bond is not called, the investor will earn a higher return than the yield to call.<\/p>\n<p>Therefore, the yield to maturity is the most accurate measure of a bond&#8217;s return. It takes into account the time value of money and the fact that the bondholder may receive the principal repayment at a future date.<\/p>\n<p>Here is a brief explanation of each option:<\/p>\n<ul>\n<li><strong>A. Yield to earning<\/strong> is not a commonly used term. It could refer to the earnings yield, which is the ratio of a company&#8217;s earnings per share to its share price. However, the earnings yield is not a measure of a bond&#8217;s return.<\/li>\n<li><strong>B. Yield to investors<\/strong> is also not a commonly used term. It could refer to the yield to maturity, which is the rate of return an investor expects to earn on a bond if they hold it until maturity. However, the yield to investors is not a specific term that is used in the financial industry.<\/li>\n<li><strong>D. Yield to return<\/strong> is not a commonly used term. It could refer to the total return on a bond, which is the sum of the bond&#8217;s coupon payments and capital gains (or losses). However, the total return is not a measure of a bond&#8217;s yield.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bond&#039;s promised rate of return is also considered as<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/bonds-promised-rate-of-return-is-also-considered-as\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bond&#039;s promised rate of 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