Question

The expected yield of a bond will be less than its yield to maturity when A. when the bond is purchased at a discount. B. market interest rates are expected to fall. C. the expected yield of a bond cannot be lower than its yield to maturity. D. market interest rates are expected to rise.

Answer 1

Answer:

Option B                                

Explanation:

In simple words, expected bond yield relates to the return which an investor expects for investing in a specific bond security. While the yield to maturity relates to the return that an investor realizes if he or she holds the security until its maturity. Thus, if the market interest rates rises than the investor will get less return as compared to the market as the retentiveness return would be less.