The yield of maturity (YTM) metric facilitates comparisons among different bonds and their expected returns, which helps investors make more informed decisions on how to manage their bond portfolios. Even for bonds consisting of different maturities and coupon rates, the YTM enables comparisons to be...
Yield to maturity has variations that account for bonds with embeddedoptions: Yield To Call (YTC):Assumes the bond will be called and repurchased by theissuerbefore it reaches maturity and thus has a shorter cash flow period. YTC is calculated, assuming the bond will be called as soon as p...
Yield to maturity has variations that account for bonds with embeddedoptions: Yield To Call (YTC):Assumes the bond will be called and repurchased by theissuerbefore it reaches maturity and thus has a shorter cash flow period. YTC is calculated, assuming the bond will be called as soon as p...
Because YTM is a representation of present value, it’s often used as a more accurate measure of bond value, as opposed to the given coupon rate. And, because bonds can trade for a premium or a discount, YTM offers a more accurate look at the bond’s true value, as opposed to simply...
Yield to worst (YTW): Used when a bond has multiple options, such as both call and put provisions. YTW represents the lowest possible yield based on the most disadvantageous terms for the investor. See also Coupon rate Subordinated bonds Interest rate risk A...
On the other hand, yield to put is what the investor can yield when holding the bond until they sell it back to the issuer. Investors tend to receive a lower coupon rate since they’re able to sell bonds back to the bond issuer and reinvest their funds elsewhere (at potentially higher...
Yield to worst (YTW): Used when a bond has multiple options, such as both call and put provisions. YTW represents the lowest possible yield based on the most disadvantageous terms for the investor. See also Coupon rate Subordinated bonds Interest rate risk A...
Yield to worst (YTW): Used when a bond has multiple options, such as both call and put provisions. YTW represents the lowest possible yield based on the most disadvantageous terms for the investor. See also Coupon rate Subordinated bonds Interest rate risk A...