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What factors affect YTM (yield to maturity)?

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What factors affect YTM (yield to maturity)?

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The Yield to maturity (YTM) or redemption yield is the yield promised to the bondholder on the assumption that the bond or other fixed-interest security such as gilts will be held to maturity, that all coupon and principal payments will be made and coupon payments are reinvested at the bond’s promised yield at the same rate as the original principal invested. It is a measure of the return of the bond. This technique in theory allows investors to calculate the fair value of different financial instruments. The YTM is almost always given in terms of Annual Percentage Rate (A.P.R.). The calculation of YTM is identical to the calculation of internal rate of return. * If a bond’s coupon rate is less than its YTM, then the bond is selling at a discount. * If a bond’s coupon rate is more than its YTM, then the bond is selling at a premium. * If a bond’s coupon rate is equal to its YTM, then the bond is selling at par.

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