Calculate Yield to Maturity
The rate of return anticipated on a bond if it is held until the maturity date.
Please fix these errors:
Interpretation:
A bond that pays #payments# coupon(s) of #Rate#% per year, that has a market
value of $#MarketValue#, and that matures in #maturityinyears# years will have
a yield to maturity of #YTM#.
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What does it mean? Well, bond investors don't just buy only newly issued bonds
(on the primary market) but can also buy previously issued bonds from other
investors (on the secondary market). Depending on whether a bond on the
secondary market is bought at a discount or premium, the actual rate of return
can be greater or lower than the quoted annual coupon rate. This is why bond
investors need to look at YTM, which measures the bond's yield from the day the
investor buys it to the day it expires, when the principal is paid to the
bondholder.
OOPS!!!
The result is too small.
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Related Links:
- Understanding the Time Value of Money - Find out how time really is money by learning to calculate present and future value.