What is the definition of yield to maturity?

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The return the investor gets from the income component of a bond as a percent of it's current price
The overall return the investor makes as a percent of a bond's par value
The overall return the investor makes if they purchase a bond today and hold to maturity
The return the investor gets from the income component of a bond as a percent of it's par value

Respuesta :

The yield to maturity best defined by the option c. The overall return the investor makes if they purchase a bond today and hold to maturity.

What is yield to maturity?

It is the total return of rate that will have been incomed by a bond when it makes all liability payments and repays the principal amount.

Since, as per the definition of yield to maturity, investor would get the original price of bond plus and the rate of interest that  finalized (at the time of bond purchase) when the maturity period will over.

Thus, the overall return the investor makes if they purchase a bond today and hold to maturity. Best describes yield to maturity.

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