Yield to Maturity

Wed, Jul 16th, 2014
The Yield to Maturity (YTM) is a finance concept used to determine the rate of return an investor will receive if a long-term, interest bearing investment, such as a bond, is held to its scheduled maturity date. This yield calculation takes into account purchase price, redemption value, time to maturity, coupon yield, and the time between interest payments. Recognizing the time value of money, the YTM is the discount rate at which the present value of all future payments would equal the present price of the bond, also known as?internal rate of return. It is implicitly assumed that coupons, upon receipt are reinvested at the YTM rate. The YTM can be determined using a programmable financial calculator. For a sample calculation of this yield measure refer to the?Bond Yield Calculator?[KSO3]