Yield to Maturity

Posted in Finance, Accounting and Economics Terms, Total Reads: 1672

Definition: Yield to Maturity

Yield to Maturity is defined as the sum of all cash inflows in the future which would make the redemption value of the bond equal to its current value. There is an annual amount received which is calculated by discounting the principal value for that current year.

The variants for the yield to maturity are as following :-

  • Yield to call – The price at which repurchase of the  option or bond  takes place which shortens the  period of the bond and the yield is calculated  on the  period  during which the option was held .
  • Yield to put – The period  for the yield is considered when the  put option has been exercised not from the day when they have been owned.

 The saturation value after which yield increase becomes stagnant is the yield to maturity.

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