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yield to average life

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Yield to average life
A yield calculation in which bonds are retired routinely during the life of the issue. Since the issuer buys its own bonds on the open market because of sinking fund requirements, if the bonds are trading below par, this action provides automatic price support for these bonds and they will usually trade on a yield to average life basis.
yield to average life
The average yield on a fixed-income security assuming an average life for the security. In the case of bonds, average life may be significantly less than the number of years until maturity because of sinking fund requirements. Thus, the investor may be forced to sell the bond back before maturity.


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