What is the difference between the yield-to-maturity (YTM) and the realized comp

Question

What is the difference between the yield-to-maturity (YTM) and the realized compound yield (RCY)? O The YTM considers only coupon payments, whereas, the RCY includes all the bond's cash flows. O The RCY is the actual return, whereas, the YTM is the expected return at the beginning of the investment. O They are actually the same concept. O The YTM is the actual return, whereas, the RCY is the expected return at the beginning of the investment Question 9 1 pts Which of the following bonds will be most sensitive to changes in market interest rates? OA bond with a 6 percent semiannual coupon and 6 years to maturity A bond with an 8 percent semiannual coupon and 8 years to maturity A bond with an 8 percent semiannual coupon and 6 years to maturity A bond with a 6 percent semiannual coupon and 8 years to maturity

Explanation / Answer

Question - 8...................Option - B is correct

YTM is the expected return from the bond used to determine the price of that bond. RCY, measures the yield realised actually from such bond ( date of buying to the date of selling)

Question - 9 ...............Option - D is correct

Lower coupon rates and high maturity duration both increases the sensitivity of the bond.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.