Submitted by dfunk50 on August 21, 2007

• Category: Business
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Yield To Maturity

Yield to Maturity
Yield to maturity (YTM) is the yield promised by the bondholder on the assumption that the bond will be held to maturity, that all coupon and principal payments will be made and coupon payments are reinvested at the bond’s promised yield at the same rate as invested. The YTM s a measurement of the return of the bond. This technique in theory allows investors to calculate the fair value of different financial instruments.
The calculation of YTM is identical to the calculation of internal rate of return.
· If a bond’s current yield is less than its YTM, then the bond is selling at a discount.
· If a bond’s current yield is more than...

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