True or False: Gross redemption yield allows investors to see if the overall yield equals the required yield.

True or False: Gross redemption yield allows investors to see if the overall yield equals the required yield.

• A. False
• B. True
• C. Not defined
• D. Only for government bonds

Answer: (B)

Gross redemption yield represents the total return you would get from a bond if you held it to maturity, assuming all coupon payments can be reinvested at the same yield and ignoring taxes and transaction costs. Because it gives a single figure for the overall return, you can directly compare it with your own required yield (the rate you want to achieve). If the gross redemption yield matches your required yield, the investment meets your target; if it’s higher or lower, you can decide accordingly. This approach isn’t limited to government bonds and isn’t undefined—GRY applies to bonds in general and serves as a benchmark you can use to judge whether the yield meets your requirements.

Gross redemption yield represents the total return you would get from a bond if you held it to maturity, assuming all coupon payments can be reinvested at the same yield and ignoring taxes and transaction costs. Because it gives a single figure for the overall return, you can directly compare it with your own required yield (the rate you want to achieve). If the gross redemption yield matches your required yield, the investment meets your target; if it’s higher or lower, you can decide accordingly. This approach isn’t limited to government bonds and isn’t undefined—GRY applies to bonds in general and serves as a benchmark you can use to judge whether the yield meets your requirements.