05-04-2013, 03:53 PM
Idea Solution :
Yield to Maturity (YTM) for a bond is the total return, interest plus capital gain, obtained from a bond held to maturity. Yield to maturity is a useful measure of the attractiveness of a seasoned bond that is held to maturity and redeemed at par value. For example, suppose you buy a $1000 par value ABC Company bond with a 5% coupon rate maturing in five years, and the market price for the bond is $900. The coupon rate is the annual interest rate payable on the $1000 par value, which is $50 per year. The current yield of the bond is the interest divided
Definition
The term Yield to Maturity also called as Redemption Yield often abbreviated as YTM and used when it comes to bond funds, is defined as the rate of return obtained by buying a bond at the current market price and holding it to maturity. Yield to Maturity is the index for measuring the attractiveness of bonds. When the price of the bond is low the yield is high and vice versa.
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Yield to Maturity (YTM) for a bond is the total return, interest plus capital gain, obtained from a bond held to maturity. Yield to maturity is a useful measure of the attractiveness of a seasoned bond that is held to maturity and redeemed at par value. For example, suppose you buy a $1000 par value ABC Company bond with a 5% coupon rate maturing in five years, and the market price for the bond is $900. The coupon rate is the annual interest rate payable on the $1000 par value, which is $50 per year. The current yield of the bond is the interest divided
Definition
The term Yield to Maturity also called as Redemption Yield often abbreviated as YTM and used when it comes to bond funds, is defined as the rate of return obtained by buying a bond at the current market price and holding it to maturity. Yield to Maturity is the index for measuring the attractiveness of bonds. When the price of the bond is low the yield is high and vice versa.
FIN622AssignmentNo.01Solution.jpg (Size: 15.67 KB / Downloads: 678)
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