Respuesta :
A bond's yield to maturity is above its coupon rate when the bond's market price is below par value. So, option (C) will be regarded as suitable.
Give a brief account on yield to maturity (YTM).
The projected total return on a bond, assuming it is kept until maturity, is known as yield to maturity (YTM). Yield to maturity, which is expressed as an annual rate, is regarded as a long-term bond yield. To put it another way, it is the internal rate of return (IRR) of a bond investment if the investor retains the bond to maturity, with all payments made as planned and reinvested at the same rate. Another name for yield to maturity is "book yield" or "redemption yield."
In order to calculate how much money one would make by purchasing a bond and holding it for a year, current yield, which is equivalent to yield to maturity, divides the annual cash inflows from a bond by its market price. However, in contrast to current yield, YTM takes into account the present value of a bond's potential coupon payments. To put it another way, it takes into account the time worth of money, whereas a straightforward current yield calculation does not. As a result, it is frequently thought of as a more accurate method of determining a bond's return.
To know more about, yield to maturity, visit :
https://brainly.com/question/26376004
#SPJ4
