Multiple choice

Yield-to-maturity of a debt fund's portfolio gives an indication of

  1. current income

  2. total return

  3. liquidity

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Yield-to-maturity (YTM) represents the total return an investor would earn if they hold a debt security until it matures, assuming all interest payments are reinvested at the same rate. YTM captures both the current income from regular interest payments AND the capital gain or loss that would be realized if the bond is held to maturity. It is therefore a comprehensive indicator of total expected return, not just current income (which would be the coupon rate or current yield).

Keep practicing — related questions