Yield to maturity is similar to current yield, but it also takes into account any gain or loss of principal at maturity. For example, if a $1,000 par bond was bought at a discount of $900, at maturity there would be a $100 gain. Likewise, if a $1,000 par bond is purchased for $1090, there will be a $90 loss in principal at maturity. Yield to maturity is a precise measure that allows you to compare bonds with different maturities that sell for more or less than par. The trouble is, it is a complex calculation that isn't printed in the paper, so you'll have to get it from your broker or bond dealer.
The effective annual rate of return earned by a bond if held to maturity. This rate takes into account the amount paid for the bond, the length of time to maturity, and assumes coupon payments can be reinvested at the yield to maturity. !-- End Index--DL
Also known as Redemption Yield. The yield on a fixed income security such as a bond, assuming it is held until maturity will tend to differ from the coupon rate due to fluctuations in market conditions.
The investor's rate of return on a security investment. The investor's rate of return on a bond held to maturity. The investor's rate of return on preferred stock if the preferred stock is not sold by the investor.
the rate of return investors would receive if they held a bond or other long-term, fixed-income investment to its maturity date. It takes into account not only the income stream generated by a bond, but also the capital gain (or loss) expected if an investor buys the bond at a discount (or premium) and holds to maturity.
The rate of return to the investor earned from payments of principal and interest, with interest compounded semi-annually at the stated yield, presuming that the security remains outstanding until the maturity date. Yield to maturity takes into account the amount of the premium or discount at the time of purchase, if any, and the time value of the investment. Compare: CURRENT YIELD; YIELD TO CALL; YIELD TO WORST. See: PRICING CALL.
A yield on a security calculated by assuming that interest payments will be made until the final maturity date, at which point the principal will be repaid by the issuer. Yield to maturity is essentially the discount rate at which the present value of future payments (investment income and return of principal) equals the price of the security. [Back
Used to determine the rate of return an investor would receive if a long-term, interest-bearing investment, such as a bond, is held to its maturity date. It takes into account purchase price, redemption value, time to maturity, coupon yield, and the time between interest payments.
The rate of return earned on an investment (such as a bond) bought at a specific price and held until maturity. The yield to maturity equals all the interest you receive from the time you purchase the bond until maturity (including interest on interest at the original purchasing yield) plus any gain (if you purchased the bond below its face, or par value) or loss (if you purchased it above its face value). The tax payable on the interest and the capital repayments is ignored.
The return of an interest-bearing investment, usually applied to a bond. Yield to maturity measures the rate of return of the bond if held to maturity, considering purchase price, redemption value, time to maturity, coupon yield and the time between interest payments.
Similar to current yield, yield to maturity also takes into account any gain or loss of principal at maturity. Yield to maturity allows comparison of bonds with different maturities selling for more or less than par.
Is the rate of return which is measured by the current expected income stream relative to the prevailing market price assuming that the asset is held until maturity. If the instrument is trading at a discount, then the yield to maturity will be greater than the coupon rate. If the instrument is trading at a premium, then the yield to maturity will be less than the coupon rate.
A standard measure of a bond's expected average annual rate of return. Yield to maturity simplifies the comparison of different investment choices by converting a bond's price, redemption value, time to maturity, coupon rate and frequency of payments into a single measure. One assumption in the calculation is that all cash flows are reinvested at the same rate of interest. Other factors that must be evaluated before including a particular bond in a portfolio include the bond's credit quality, tax status, maturity date, call date and current yield. See also Yield to call. Kembali ke top
The yield on a bond, taking into account the interest rate, purchase price in relation to par value and number of years left to maturity. For example, if an investor purchases a $1,000 bond for $800, the $200 profit ($1,000 - $800) the owner will receive at maturity will be added to the interest earned when calculating yield to maturity.
A yield based on the assumption that the security remains outstanding to maturity. It represents the total of coupon payments until maturity, plus interest on interest, and whatever gain or loss is realized from the security at maturity.
The calculation of an average rate of return on a bond (with a maturity over one year) if it is held to its maturity date and if all cash flows are reinvested at the same rate of interest. It includes an adjustment for any premium paid or discount received. It is a calculation used to compare relative values of bonds.
The rate of income on an investment, minus any premium or plus any discount, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond, expressed as a percentage.
Represents the total of coupon payments until maturity plus compounded interest, and the gains or losses realized from the security. The assumption is that the security remains outstanding until maturity.
The yield of a bond to maturity takes into account the price discount from or premium over the face amount. It is greater than the current yield when the bond is selling at a discount and less than the current yield when the bond is selling at a premium.
A statistic applying to bonds showing the total return to an investor if the bond is held to maturity or redemption. It is the aggregate of all gross interest, dividends and capital gain or loss at redemption annualised.
Yield to maturity is the calculated return on investment that an investor will get if they hold the bond to maturity. It takes into account the present value of all future cash flows, as well as any premium or discount to par that the investor pays.
A yield concept designed to give the investor the average annual yield on a security. It is based on the assumption that the security is held to maturity and that all interest received over the life of the security can be reinvested at the yield to maturity.
The average annual yield of a fully amortized loan, that is held by an investor for the life of the loan. The average rate takes into the account the fact that the outstanding principal, and consequently the amount of interest, declines each year until the loan is fully paid. When the term is used in reference to a bond or other security, it means the average annual rate of return of the security when held to maturity, taking into account discounts or premiums paid when the security is purchased and capital gains or losses. Zero-Percent Financing A loan that requires not interest payments; in the U.S., the Internal Revenue Service assigns 10 percent for the borrower and for the lender.
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.
The compound rate of return that investors will receive for a bond with a maturity greater than one year if they hold the bond to maturity and reinvest all cash flows at the same rate of interest. It also takes into account purchase price, redemption value, coupon yield, and the time between interest payments. The YTM will be greater than the current yield when the bond is selling at a discount and will be less if it is selling at a premium. YTM can be approximated using a bond yield table or can be determined using a programmable calculator equipped for bond calculations. YTM is used extensively in comparing fixed income investments, making fixed income portfolio decisions, and in financial planning. See: Yield To Average Life; Yield To Call
Return an investor will receive if an interest-bearing investment is held to its maturity date and all interest payments are reinvested at the security's YTM. It takes into account purchase price, redemption value, time remaining until maturity, coupon yield, and the time between interest payments.
Yield to maturity (YTM) is the internal rate of return on cash flows of a fixed income security, often a bond, if the security were to be held until maturity. It is a measurement of the return of the bond. This technique in theory allows investors to calculate the fair value of different financial instruments.