Yield to Put
Yield to put is the yield assuming that you hold the security until its first put date. Yield to put is generally higher than yield to maturity, because the shortened maturity reduces the bond’s potential for price depreciation.
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Premium Bonds |
price > par value coupon rate > current yield > YTM > YTC |
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Discount Bonds |
price < par value coupon rate < current yield < YTM < YTC |
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Par Bonds |
price = par value coupon rate = current yield = YTM |
Exercise
Answer true or false.
- 1. True or false: The yields listed on the customer trade confirmation will be the same as the yield to maturity.
- 2. True or false: A dealer must provide the customer with a written confirmation of the trade by the time the trade has been completed.
- 3. True or false: A yield calculation must be included in the confirmation for a transaction involving municipal fund securities.
- 4. True or false: Customer confirmations must include specific information about the security being bought or sold, such as the name of the issuer and CUSIP number, if applicable.
- 5. True or false: In an agency transaction, the dealer must disclos