Browse:  #  A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z 

Yield to maturity

Yield to maturity Definition

The percentage rate of return on a bond if it is held to maturity. When a bond is selling at par this is the same as the nominal yield. Although, when a bond is selling at a discount, at its maturity date an investor will also receive the difference between the discount and par. On the other hand, an investor loses the difference between the premium and par at redemption if it’s at a premium. Calculation of YTM is:

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

RELATED TERMS
Bond
Face value
Maturity date
Yield
RELATED CATEGORIES
Bonds







Ask a Question

Learn the famous formula for money-making, based upon the THIRTEEN PROVEN STEPS TO RICHES! Get your FREE Copy & Instant Access to Think and Grow Rich by Napoleon Hill just by signing up.
 
   
Newsletter cover
Browse:  #  A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z