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    Question

    YTM of a Bond is not affected by

    A Coupon Rate Correct Answer Incorrect Answer
    B Issue Price Correct Answer Incorrect Answer
    C Redemption Value Correct Answer Incorrect Answer
    D Interest amount Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The YTM or yield to maturity is unaffected by the issue price of a bond. YTM can be estimated as (Interest amount + (Redemption Value- Market Price)/N)/(average of redemption value and market price of bond). As such interest amount, coupon rate (that helps to calculate the interest amount) and redemption value would affect the YTM; however, issue price does not affect the YTM.

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