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Yield to Maturity (YTM)

Yield to Maturity (YTM) is the annual rate of return on a bond investment if the holder holds the investment to maturity. The calculation assumes that all coupon payments are received on time and reinvested at the same interest rate.

The YTM is calculated using the following formula:

[Annual Coupon Payment + (Face Value – Market Price of Bond) / Number of Compounding Periods] / [(Face Value + Market Price of Bond) / 2]

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Knott Learning

Yield to Maturity (YTM)

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