The discount rate that equalizes the current market value of a loan or security with the expected stream of future income payments from that loan or security is known as:
A)bank discount rate.
B)yield to maturity.
C)annual percentage rate.
D)net interest margin.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

The discount rate that equalizes the current market value of a loan or security with the expected stream of future income payments is known as yield to maturity. This reflects the total return an investor can expect to earn from holding the security until maturity, taking into account its current market price, coupon rate, and the time remaining until maturity. Options A, C, and D are not accurate definitions of the concept.

The Discount Rate That Equalizes the Current Market Value of a Loan