Which of the following is defined as the rate of return anticipated on a bond if it is held until the maturity date?
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A. B. C. D.D
The correct answer is D. Yield to maturity.
Yield to maturity is defined as the rate of return anticipated on a bond if it is held until the maturity date. It is also known as the "internal rate of return" or "yield." The yield to maturity takes into account the bond's price, face value, coupon rate, and time to maturity.
The discount rate (A) is the rate at which future cash flows are discounted to determine their present value. It is often used in discounted cash flow analysis.
The interest-free rate (B) is the rate at which an investment earns no interest. It is often used as a benchmark for comparison with investments that do earn interest.
Return on equity (C) is a measure of profitability that indicates how much profit a company generates for each dollar of shareholder equity. It is often used as a measure of a company's efficiency in using its equity to generate profits.
In summary, yield to maturity is a key concept in bond investing that measures the expected rate of return if a bond is held until maturity.