Yield to MaturityKnowledge Center |
8 items • 29.114 visits
Sign up for free
Welcome to the Yield to Maturity center of 12manage.
Here we exchange knowledge and experiences in the field of Yield to Maturity.
❗Sign up now to gain access to 12manage. It's completely free.
What is Yield to Maturity?Yield to Maturity (YTM) is the annual rate of return anticipated on a bond that a bondholder buying a bond today and holding it to maturity would receive on his investment. YTM takes into account the total of annual interests payments (coupon yield) , the purchase price, the Redemption Value, the amount of time (number of years) remaining until maturity, and the time between interest payments. Recognizing the Time Value of Money, the technique is used to determine the rate of return an investor will receive if a long term, interest-bearing investment is held to its Maturity Date. An approximate YTM can be found by using a bond yield table. YTM is equal to the discount rate at which the Present Value of all future payments would equal the present price of the bond, also known as the Internal Rate of Return. Using Bond Insurance, investors can protect themselves against economical loss in the event of payment default of the issuer, in return for paying a specified premium to a third party, usually an insurance company. The premium will provide interest and capital repayments as specified in the bond policy.
Note that it is assumed in the YTM rate, that the coupons are reinvested at the YTM rate. This may or may not be accurate, if the bonds are sold at prices above, or below, their Face Value or Par Value. Also called Maturity Yield and Effective Rate of Return.
Compare with: Maturity Date | Redemption Value | Face Value | Net Present Value |
|
Return to Management Hub: Decision-making & Valuation | Finance & Investing More on Management | Return to Management Dictionary |
This ends our Yield to Maturity summary and forum. |
About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2024 12manage - The Executive Fast Track. V17.2 - Last updated: 17-5-2024. All names ™ of their owners.