Series 79: Yield To Maturity

Taken from our Series 79 Top-off Online Guide

Yield to Maturity

Yield to maturity (YTM) is the estimated annual rate of return a bondholder will receive if he holds the bond to maturity. Unlike current yield, yield to maturity takes into account the time value of money. Yield to maturity represents the rate at which the net present value of future cash flows from the bond will equal the bond’s current price. In other words, it is the bond’s internal rate of return (IRR). (YTM assumes that all coupon payments are reinvested at the YTM rate.)

YTM is a useful figure b

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