quiz 3 formula sheet\nquestion 15 (1 point)\nthe yield to maturity for a discount bond is ________ related…

quiz 3 formula sheet\nquestion 15 (1 point)\nthe yield to maturity for a discount bond is ________ related to the current bond price.\nnot\nnegatively\npositively\ndirectly

quiz 3 formula sheet\nquestion 15 (1 point)\nthe yield to maturity for a discount bond is ________ related to the current bond price.\nnot\nnegatively\npositively\ndirectly

Answer

Brief Explanations:

The yield - to - maturity (YTM) formula for a bond implies an inverse relationship for discount bonds. As the current bond price decreases (for a discount bond), the YTM increases, and vice - versa. This is due to the fixed future cash flows (face value and coupon payments if any) and the time value of money concept.

Answer:

B. Negatively