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Yield To Maturity - YTM
       
 
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Yield To Maturity - YTM

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Yield To Maturity - YTM
Yield to Maturity (YTM) is the Interest rate that, if inserted in the DCF price equation, makes the given price of the Bond exactly fair.
    
It takes into account not only the Cash flows coming from the Bond (thus automatically including any Capital Gain or loss at maturity) but also their timings.
    
The rate of return anticipated on a Bond if it is held until the Maturity Date. YTM is considered 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 is also assumed that all coupons are reinvested at the same rate. Sometimes this is simply referred to as "Yield" for Short.
Posted by  ebs Finanzakademie GmbH
 
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