Abstract
This paper reaffirms the long-held view that the promised yield to maturity of a coupon bond can be realized only under certain restrictive conditions. Specifically, the realized yield equals the promised yield only if the spot rate and yield curves are flat and remain unchanged throughout the term of the bond, a condition which rarely if ever holds. In addition, we explain that, regardless of the reinvestment rates, the promised yield on a coupon bond will be realized, provided that the bond is held not to its maturity but to its duration.
Recommended Citation
(2026)
"The Relationship between the Promised and Realized Yields to Maturity Revisited,"
Journal of Economics and Finance Education: Vol. 8:
Iss.
2, Article 4.
Available at:
https://scholarship.rollins.edu/jefe/vol8/iss2/4
