The return to bondholders is guaranteed to equal the yield to maturity only if the bond is held until maturity.

Question

Quizplus · Accepted Answer

This statement is true because the yield to maturity assumes that the bond will be held until maturity and all interest payments will be received in full. If the bondholder sells the bond before maturity, the actual return may differ from the yield to maturity due to changes in market interest rates and other factors.

The Return to Bondholders Is Guaranteed to Equal the Yield