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YTM

YTM Definition

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

RELATED TERMS
Bond
Face value
Maturity date
Yield
RELATED CATEGORIES
Bonds







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