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Yield of interest rate which is below than coupon rate, this yield is classified as
Answer & Solution
Correct Answer:
Option
B
Yield of interest rate which is below than coupon rate, this yield is classified as yield to call. Yield to call (YTC) is a financial term that refers to the return a bondholder receives if the security is held until the call date, before the debt instrument reaches maturity.
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LoginEasy explanation:
Jab market interest rate (yield) < coupon rate, bond premium par sell hota hai
Investor ka total return agar bond maturity tak hold kare, usse yield to maturity kehte hain
Other options:
Yield to call → tab use hota hai jab bond maturity se pehle redeem ho
Yield to earning / yield to investors → ye standard terms nahi hain
Trick: Coupon vs market rate se jo yield milti hai, aur bond maturity tak rakha jaye, wo hamesha yield to maturity hoti hai.