- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 3. Relationships between Bond Price and Bond Characteristics

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**CFA Practice Question**

The ______ must be reinvested at the ______ to earn the expected yield to maturity.

B. coupon payments; yield to maturity

C. coupon payments; current market rate

A. capital gain; current market rate

B. coupon payments; yield to maturity

C. coupon payments; current market rate

Correct Answer: B

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**User Contributed Comments**
3

User |
Comment |
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Cfrey |
This is only if a bond isn't bought a premium/discount correct? |

ascruggs92 |
This is in all cases. Time Value calculations assume coupon payments are immediately reinvested at the prevailing rate of return. |

khalifa92 |
another perspective; yield to maturity is the internal rate of return (IRR) that equalize the discounted cash flows to present value. the IRR takes into account the reinvestment assumption! |