Yield to maturity
Rate of return of an investment / From Wikipedia, the free encyclopedia
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The yield to maturity (YTM), book yield or redemption yield of a fixed-interest security is an estimate of the total rate of return anticipated to be earned by an investor who buys it at a given market price, holds it to maturity, and receives all interest payments and the capital redemption on schedule.[1][2]
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It is the theoretical internal rate of return, or the overall interest rate, of a bond — the discount rate at which the present value of all future cash flows from the bond is equal to the current price of the bond.[3] The YTM is often given in terms of annual percentage rate (APR), but more often market convention is followed. In a number of major markets, the convention is to quote annualized yields with semi-annual compounding.[4]