- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 1. Bond Pricing and the Time Value of Money
CFA Practice Question
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
Correct Answer: B
Yield-to-maturity is the promised rate of return.
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. |