How do I calculate the yield to maturity?
It is important to understand how to calculate Yield to maturity (YTM) when considering investing in bonds. YTM is the total return on a bond when it matures and is also known as book yield or redemption yield. The formula for YTM calculation is as follows:
YTM = (C + M(1 + r)^n)/[(1+r)^n - 1], where C is the coupon payment, M is the face value of the bond, r is the required rate of return, and n is the number of years until maturity. To calculate YTM, one can use either Sourcetable.
What is the difference between yield to maturity and coupon rate?
The coupon rate is the percentage rate of interest paid on a bond's face value, while yield to maturity is the rate of return that an investor will receive if the bond is held until the bond's maturity date.