Abstract
Our original note addressed a common misconception that to earn the yield-to-maturity (YTM) on a coupon bond an investor must reinvest the coupon payments. Shirvani and Wilbratte (2009) take issue with our presentation and results. We will demonstrate that their arguments entirety rest on the proposition that the YTM must equal the realized compounded yield (RCY). This is a construct that explicitly assumes coupon reinvestment. We made no claim in our original presentation with regard to their proposition, because it is not required to calculate the YTM. Furthermore, we will discuss their claims with regard to the “economic significance” of the yield to maturity measure.
Recommended Citation
(2026)
"Yield-to-Maturity and the Reinvestment of Coupon Payments: Reply,"
Journal of Economics and Finance Education: Vol. 8:
Iss.
2, Article 6.
Available at:
https://scholarship.rollins.edu/jefe/vol8/iss2/6
