Busıness Fınance I Deneme Sınavı Sorusu #1138708
Which of the statement below is true for the relationship between a bond’s yield-to-maturity and the rate of return in a particular period?
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If the market rate of interest and the bond’s yield-to-maturity changes over the period, then the bond’s rate of return will be equal to its yield-to-maturity. |
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If the market rate of interest and the bond’s yield-to-maturity changes over the period, then the bond’s rate of return will be higher than its yield-to-maturity. |
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If there is a decline in interest rates, the rate of return will be higher than the bond’s yield-to-maturity as in the case of the example. |
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If there is a decline in interest rates, the rate of return will be lower than the bond’s yield-to-maturity as in the case of the example. |
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If there is an increase in interest rates, the rate of return will be greater than the bond’s yield to maturity because of the decline in the value of the bond with the increase in interest rates. |
If the market rate of interest and the bond’s yield-to-maturity does not change over this period, then the bond’s rate of return will be equal to its yield-to-maturity. If there is a decline in interest rates, the rate of return will be higher than the bond’s yield-to-maturity as in the case of the example. If there is an increase in interest rates, the rate of return will be less than the bond’s yield to maturity because of the decline in the value of the bond with the increase in interest rates.
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