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yield to maturity |
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Yield to maturity The percentage rate of return paid on a bond, note, or other fixed income security if the investor buys and holds it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to maturity, and market price. It assumes that coupon interest paid over the life of the bond will be reinvested at the same rate. Yield to Maturity The rate of return on a bond if it is held until maturity. This is expressed as an annual rate; the calculation of the YTM includes the coupon rate (if any), length of the bond, market value, and face value. Bond quotes are made in terms of the YTM, but an individual investor's yield may be different if he/she does not hold the bond, or if the bond is called before maturity.
Yield to maturity (YTM). Yield to maturity is the most precise measure of a bond's anticipated return and determines its current market price. YTM takes into account the coupon rate and the current interest rate in relation to the price, the purchase or discount price in relation to the par value, and the years remaining until the bond matures. yield to maturity (YTM) The internal rate of return of an investment, taking into consideration all incomes and expenses and their timing. Yield to Maturity What Does Yield to Maturity Mean? The expected rate of return on a bond if it is held until the maturity date; YTM is a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate, and time to maturity. It also assumes that all coupons are reinvested at the same rate. Sometimes YTM is referred to simply as yield. Investopedia explains Yield to Maturity An investor can approximate YTM by using a bond yield table. However, because calculating a bond's YTM is complex and involves trial and error, it usually is done with a programmable business calculator. Related Terms: Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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