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The percentage rate of return on a bond if it is held to maturity. Calculation of YTM is:
YTM = ((Coupon + Net Change in Price) / Years to Maturity) / ((Purchase Price + Par Value) / 2 )
Or
YTM = I + [(FV – CV) / N] / (FV + CV) / 2
where
I = interest paid annually in dollars FV = face value CV = current value (price) N = number of years until maturity
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