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Basic Question 4 of 4
Which yield measure is the internal rate of return that makes the present value of cash flows equal to the bond price?
B. Yield-to-maturity
C. Spot rate
A. Market discount rate
B. Yield-to-maturity
C. Spot rate
User Contributed Comments 2
| User | Comment |
|---|---|
| brookew | what's the difference between YTM and market discount rate? I thought YTM was a market discount rate since it is in the denominator of DCF models |
| khalifa92 | YTM= IRR that makes discounted cash flows = bond price r = required market interest rate for a given risk. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
calculate a bond's price given a yield-to-maturity on or between coupon dates
CFA® 2024 Level I Curriculum, Volume 4, Module 6.