# Yield to maturity explained

Never miss a great news story! Get instant notifications from Economic Times Allow Not now. It is also known as redemption yield. As the name suggests, if an investment is held till its maturity date, the rate of return that it will generate will be Yield to Maturity. Calculation of YTM is a complex process which takes into account the following key factors: Current Market Price 2. Coupon Interest Rate 4.

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Yield to maturity (YTM) is the total return expected on a bond if the bond is held until maturity. A bond's yield to maturity (YTM) is the estimated rate of return based on the assumption that it will be held until its maturity date and not called.

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The yield to maturity YTM , book yield or redemption yield of a bond or other fixed-interest security , such as gilts , is the theoretical internal rate of return IRR, overall interest rate earned by an investor who buys the bond today at the market price, assuming that the bond is held until maturity , and that all coupon and principal payments are made on schedule.

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Yield to maturity YTM is the rate of return expected on a bond which is held till maturity. It is essentially the internal rate of return on a bond and it equates the present value of bond future cash flows to its current market price. If m is the number of coupons in a year and n is number of years the following equations can be used to find the yield to maturity. The figure is calculated by trial and error in which we plug discount rates into the equation developed above until we find a rate which satisfies the equation i.
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#### Yield+to+maturity+explained

•   Ana Ribeiro 20.11.2018 at 11:33

Yield to maturity YTM measures the annual return an investor would receive if he or she held a particular bond until maturity.

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•   Liv Vell 21.11.2018 at 04:44

I wonder when Skepticism will be rolled out.

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•   Elie_d7 18.11.2018 at 22:51

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•   King Kong 12.11.2018 at 22:00

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•   Sarah M 18.11.2018 at 10:33

A bond's coupon rate is the actual amount of interest income earned on the bond each year based on its face value.

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•   Hoseokmoon 16.11.2018 at 19:43

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•   Cathy Cee 19.11.2018 at 03:40

Yield to maturity YTM is the total return anticipated on a bond if the bond is held until it matures.

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