When computing yield to maturity,the implicit reinvestment assumption is that the interest payments are reinvested at the:
A)Coupon rate.
B)Current yield.
C)Yield to maturity at the time of the investment.
D)Prevailing yield to maturity at the time interest payments are received.
E)The average yield to maturity throughout the investment period.

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) calculation assumes that all coupon payments are reinvested at the same rate as the YTM itself, which is the rate of return anticipated on a bond if held until it matures.

When Computing Yield to Maturity,the Implicit Reinvestment Assumption Is That