What is a bond's yield to maturity (YTM)?

Fixed Income Investment Quiz

Quiz
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Professional Development
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Professional Development
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Medium
James Grefalde
Used 1+ times
FREE Resource
15 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
The coupon payment divided by the bond's face value
The total return anticipated on a bond if held until maturity
The annual interest payment divided by the bond's market price
The interest rate set by the bond's issuer
2.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
Which of the following best describes bond duration?
The time remaining until the bond matures
A measure of a bond's price sensitivity to interest rate changes
The total interest earned on a bond over its lifetime
The difference between the bond's coupon rate and YTM
3.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
What does an upward-sloping yield curve typically indicate?
Economic recession
Declining interest rates
Economic growth expectations
High inflation expectations
4.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
What is the primary purpose of a callable bond?
To ensure fixed payments to investors
To allow issuers to redeem the bond before maturity
To provide higher yields than regular bonds
To avoid interest rate risks for investors
5.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
What is convexity in bond investments?
The rate of change of bond duration
The bond's price volatility
The annual yield on a zero-coupon bond
A measure of the curvature in the price-yield relationship
6.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
If a bond with a 5% coupon rate is priced at $950, which of the following is true?
The YTM is greater than 5%
The YTM is less than 5%
The bond is trading at par
The bond has a lower risk premium
7.
MULTIPLE CHOICE QUESTION
45 sec • 2 pts
If the yield curve becomes inverted, which of the following is a potential implication?
Interest rates are expected to rise
Economic expansion is on the horizon
A recession may occur soon
Bond prices will fall uniformly
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