What is Yield to Maturity?
Yield to maturity is considered a long-term bond yield but is expressed as an annual rate. In other words, it is the internal rate of return (IRR) of an investment in a bond if the investor holds the bond until maturity, with all payments made as scheduled and reinvested at the same rate. Yield to maturity is also referred to as "book yield" or "redemption yield". Yield to maturity is similar to current yield, which divides annual cash inflows from a bond by the market price of that bond to determine how much money one would make by buying a bond and holding it for one year. Yet, unlike current yield, YTM accounts for the present value of a bond's future coupon payments.
How to Calculate Yield to Maturity?
Yield to Maturity calculator uses Yield to Maturity (YTM) = (Coupon Payment+((Face Value-Price)/Years to Maturity))/((Face Value+Price)/2) to calculate the Yield to Maturity (YTM), Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to Maturity (YTM) is denoted by YTM symbol.
How to calculate Yield to Maturity using this online calculator? To use this online calculator for Yield to Maturity, enter Coupon Payment (CP), Face Value (FV), Price (Price) & Years to Maturity (Yrs) and hit the calculate button. Here is how the Yield to Maturity calculation can be explained with given input values -> 0.015686 = (20+((800-900)/15))/((800+900)/2).