Posted by **Rajini** on Wednesday, April 11, 2007 at 9:56pm.

Yield to maturity (YTM) is the calculation utilizing the current price of the investment, the coupon cash flows and the par amount at maturity. However, the mathematics of the YTM calculation is virtually wrong or incorrect in the real world for coupon bonds greater than zero (non-zero coupon bonds). Which statement below best describes this incorrect math formula? (Points: 4)

Coupon payments every 6 months might be small and therefore, cannot be reinvested in an efficient manner.

Interest rates at the time of the coupon payments will not be identical to YTM rate calculated.

The dynamics of the real world markets and the supply and demand for borrowing and lending almost predict that rates will be different on the coupon dates than the YTM calculation assumes.

This is the best math formula we have; and universally accepted.

All of the above statements are correct.

## Answer this Question

## Related Questions

- FINANCE - Current yield and yield to maturity A bond has a $1,000 par value, 10 ...
- Finance - 2. You are now considering adding a corporate bond to your investment ...
- Finance - Dahler Corporation has just issued a bond with a maturity of 20 years...
- finance - Coles Inc's bonds currently sell for $1,180 and have a par value of $1...
- Finance - Which of the following statments is CORRECT? a. Assume that two bonds ...
- Finance - A bond has a $l000 par value, l0 years to maturity, a 7 percent annual...
- financial analysis - A zero coupon bond with a par value of 1,000 has 15 years ...
- Math - Bond Yields. An AT&T bond has 10 years until maturity, a coupon rate of 8...
- Finance - I missed one day of class and now i cannot figure this out... I ...
- Capital Markets - Bonds - You are buying right now a zero-coupon bond. It has ...

More Related Questions