Question

The bond market requires a return of 10.7 percent on the twenty year bonds that Paul’s Poultry has issued. Which of the following describes the 10.7 percent?

A. coupon rate
B. face rate
C. call rate
D. yield to maturity
E. interest rate

Answer 1

The correct option is D

Step-by-step explanation:

YTM (Yield to Maturity) is the aggregate return or yield which is predicted on the bond if the bond is held till the maturity date. It is considered to a long term bond but stated or expressed as the annual rate.

Under this situation or question, bond need a return is 10.7%, so it will be a yield to maturity as 10.7% is a return which the person will get whereas yield is what the bond will provide on its maturity date.