Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price. It is like an internal rate of return of a bond.

Calculating yield-to-maturity of a bond selling at par is easy. It is equal to its coupon interest rate. For discount bonds, yield-to-maturity is greater than their coupon rate whereas yield-to-maturity of premium bonds is less than their coupon rate.

Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield ((p₁-p₀)/p₀).

As also understood from the information given, all of the statements in the options about yield-to- maturity are correct, so the correct answer is E.