Question

Which of the following is FALSE?

1. Because we can convert any bond price into a yield, and vice versa, bond prices and yields are often used interchangebly

2.The iRR of an investment in a bond is given a special name, the yield to maturity (YTM)

3. Unlike the case of bonds that pay coupons, for zero-coupon bonds, there is no simple formula to solve for the yield to maturity directly

4. One advantage of quoting the yield to maturity rather than the price is that the yield is independent of the face value of the bond.

Answer 1

The false statement is-

3. Unlike the case of bonds that pay coupons, for zero-coupon bonds, there is no simple formula to solve for the yield to maturity directly

The formula is same for zero-coupon bonds and bonds that pay coupon except we don't include annuity in the computation.