In class you learned that the yield to maturity of a bond is the rate of return on the bond if you buy the bond today, hold it until its maturity date, and receive all the promised payments. When you talk to your friend Luis, who has been working in finance for a year, about it, he says: “The yield to maturity does not take the risk of default into consideration and because bond investors want to be compensated for the higher risk, the rate of return on most bond investments is higher than the YTM.” Is Luis correct, and why? Explain briefly!