CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

The yield to maturity is the rate that equates ______.

A. the present value of the expected cash flows with the principal repayment
B. the present value of the expected cash flows with the purchase price
C. the present value of the reinvested income with the principal repayment
Correct Answer: B

User Contributed Comments 4

User Comment
danlan YTM considers coupon, reinvestment income, ...
or in another word, the whole discounted cash flow.
EminYus it considers the capital gain/loss too
gill15 Confused with this. Isn't the Purchase price exactly the same as the principal? Or is principal value the maturity value?

It must be otherwise it wouldnt make sense. I think I remember reading that before.
johntan1979 gill15, the principal is the par value, which is repaid in full at maturity.
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