Question
When does a bond trade at a discount to par?
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Answer
When its coupon rate is less than its YTM.
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Question
What key assumption makes yield to maturity a realized return measure only under specific conditions?
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Answer
Coupons are reinvested at the yield to maturity.
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Question
If comparable bonds differ from the target bond in credit quality, what adjustment is made in matrix pricing?
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Answer
Add an appropriate credit spread adjustment.
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Question
If coupons cannot be reinvested at the bond's YTM, what happens to realized return relative to YTM?
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Answer
It may differ from YTM.
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