Exam ICWIM Topic 1 Question 110 Discussion

Actual exam question for CISI's ICWIM exam
Question #: 110
Topic #: 1
Which of the following is used to establish an investor's total return from a bond?

Suggested Answer: D Vote an answer

* Yield to Maturity (YTM)
* YTM is the total return an investor can expect from a bond if held to maturity, consideringannual coupon paymentsand any difference between the purchase price and the bond's face value.
* Why the Answer is D
* YTM incorporates all cash flows, providing a comprehensive measure of total return.
* Why Other Options are Incorrect
* A. Running Yield: Considers only current income relative to price, not total return.
* B. Annual Coupon: Ignores price changes and reinvestment potential.
* C. Price-to-Book Ratio: Unrelated to bonds, applies to equities.
* ICWIM Study Guide, Chapter on Fixed Income: Details YTM and its role in total return calculations.
* Bond Investment Literature: Highlights the comprehensive nature of YTM.
References

by Guy at Sep 25, 2025, 01:08 AM

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