Yield of interest rate which is below than coupon rate, this yield is classified as
A. yield to maturity
B. yield to call
C. yield to earning
D. yield to investors
Answer: Option B
Solution (By Examveda Team)
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.This Question Belongs to Commerce >> Financial Management
Correct answer: A. yield to maturity
Easy 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.