yield to maturity

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Related to redemption yield: Yield to maturity, YTM

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)

The annual return on a bond held to maturity when interest payments and price appreciation (if priced below par) or depreciation (if priced above par) are considered. When a bond sells at par, the yield to maturity is the same as the current yield because price appreciation or depreciation is zero if the security is held to maturity. Bond quotations are generally on a yield-to-maturity basis, although an investor who sells a bond before maturity may earn a yield different from the yield to maturity as calculated at the time the security was purchased. See also internal rate of return, maturity basis.

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.

References in periodicals archive ?
Zeros with a 8.25 per cent redemption yield, (100p becomes 148.6p) income shares with an initial gross yield of eight per cent (with dividend growth prospects), and capital shares with potential for growth and the only capital share linked directly to the FTSE-100.
The average gross redemption yield of all zero dividend shares is around 7.18 per cent per annum compound, although it is possible to lock into returns as high as 8.5 per cent per annum gross compound.
"It was foolish of the Government to have removed the recovery on dividends by pensions schemes at as time when inflation and gilt redemption yield were going through a long-term secular decline, which is inevitably encouraging companies to switch from f inal salary to money purchase arrangements scheme."
With gross redemption yields (the value of both income payments plus capital loss/gain if a bond is held to maturity) at historic lows, maintaining income streams from them in the current environment often comes at a price.
With average redemption yields on gilts currently running at around 4pc, it is easy to see why companies who have realigned in this way might not be able to pay sustainable yearly bonus rates in excess of 4pcper annum,less expenses -which we might assume to be 2pcpa.