Economics · Bond Valuation

Consider the following statements regarding fixed-income securities: Statement 1: The Yield to Maturity (YTM) of a bond represents a single, constant discount rate that equates the present value of future cash flows to the current market price. Statement 2: For a zero-coupon bond, the YTM calculation is simplified as there are no intermediate coupon payments. Statement 3: An investor expecting market interest rates to decline after purchasing a long-term bond expects a holding period return that could exceed the initial YTM. Statement 4: Yield to Call assumes the issuer will redeem the bond at the earliest possible call date. Statement 5: A limitation of the YTM metric is its inherent assumption of zero default risk, which is why credit spreads are added for corporate bonds. Statement 6: For bonds trading exactly at par, the YTM, current yield, and stated coupon rate are numerically identical. Statement 7: Calculating the exact YTM for a coupon-bearing bond usually involves an iterative trial-and-error process or numerical methods like the Newton-Raphson technique. Which of the following describes the accuracy of these statements?