A:
All of the following are true concerning the YieldtoMaturity (YTM) of a bond EXCEPT:
a) YTM is the promised rate of return an investor will receive from a bond at the current market price if held to maturity.
b) It is sometimes known as the dollarweighted return.
c) YTM assumes that the investor reinvests all coupons received from a bond at a rate equal to the computed YTM.
d) The premium or discount on the bond is not an important factor in the calculation of YTM.
a) YTM is the promised rate of return an investor will receive from a bond at the current market price if held to maturity.
b) It is sometimes known as the dollarweighted return.
c) YTM assumes that the investor reinvests all coupons received from a bond at a rate equal to the computed YTM.
d) The premium or discount on the bond is not an important factor in the calculation of YTM.
The correct answer is d):
YTM is the promised rate of return an investor will receive from a bond at the current market price if held to maturity. YTM takes into account the amount of the premium or discount (if any) and the time value of the investment. To calculate the YTM you must know the present value of the bond, future value, time to maturity, and the coupon rate. YTM is similar to the internal rate of return (IRR) it is also called dollarweighted return.
YTM is the promised rate of return an investor will receive from a bond at the current market price if held to maturity. YTM takes into account the amount of the premium or discount (if any) and the time value of the investment. To calculate the YTM you must know the present value of the bond, future value, time to maturity, and the coupon rate. YTM is similar to the internal rate of return (IRR) it is also called dollarweighted return.
RELATED FAQS

On what basis does the sustainable growth rate fluctuate?
Learn about the differences between the calculations for the yield to maturity and spot rate for determining the present ... Read Answer >> 
What is the difference between yield to maturity and the spot rate?
Find out how yield to maturity and spot rate calculations use different discount rates to determine the present market value ... Read Answer >> 
What is the difference between yield to maturity and holding period return yield?
Learn about the differences between a bond's yield to maturity (YTM) and its holding period return, and why bondholders should ... Read Answer >> 
What does a negative bond yield mean?
Find out what it means when a bond has a negative yield and what circumstances must arise for the yield to be negative when ... Read Answer >> 
Can a bond have a negative yield?
The return a bond provides to an investor is measured by its yield, which is quoted as a percentage. Current yield is a commonly ... Read Answer >> 
What is the relationship between current yield and yield to maturity (YTM)?
Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >>
Related Articles

Investing
Bond Yields: Current Yield And YTM
A bond's current yield, also called "bond yield," is the interest it pays annually divided by the bond's price. A stock's current yield, also called "dividend yield," is the sum of its annual ... 
Investing
What You Need To Know About Bond ETF Yields
When it comes to fixed income investing, yield is an important component of a bond investment’s total return to accurately assess if it's the right move. 
Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Investing
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Investing
Callable Bonds: Leading A Double Life
Find out more about these dangerous and exciting cousins to regular bonds. 
Financial Advisor
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing
3 Best HighYielding Long Term Government Bond ETFs (EDV, ZROZ)
Learn about three exchangetraded funds that invest in longterm U.S. government bonds and offer high distribution yields to investors. 
Investing
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Investing
How To Evaluate Bond Performance
Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk.
RELATED TERMS

Yield To Maturity (YTM)
The total return anticipated on a bond if the bond is held until ... 
Current Yield
Annual income (interest or dividends) divided by the current ... 
Risk Discount
A situation where a particular investor, either an individual ... 
Bond Quote
The price at which a bond is trading. A bond quote is typically ... 
Discount Note
A shortterm debt obligation issued at a discount to par. Discount ... 
Average Price
1. A representative measure of a range of prices that is calculated ...