What is the yield of maturity?

The expected return rate is the expected return on the link. In principle, it is possible to calculate this number provided that the bond holder decides to keep control of the investment up to the due date. Often listed in financial reports such as YTM, it is determined using a simple formula in conjunction with the basic pieces of link information. Several key elements are involved in determining the yield, but one of the basic components is the current revenue from the market price. This fixed income amount helps to anchor the calculation so that it has a certain importance in the task to proceed the future income generation.

together with the current market price, the nominal value and the degree of coupon interest will also affect the exact assessment of the income in the bond issue. These elements are also considered to be stable and help facilitate the determined return rate if it is intended to hang on the bond until the original due date.

When considering all basic elements related to the calculation of revenue for maturity, it is often assumed that all coupons on the bond question will be reinstorated at the same speed. It is usually acceptable for a general idea of ​​the yield of a given bond problem. It should be noted that factors involved in the calculation of a more accurate number may become quite complicated and may require a certain number of experiments and mistakes because different scenarios are running. Today, many financial analysts prefer to calculate using software programs that can immediately consider several variables and provide a number of possible BNA revenues of slightly different interest rates and market prices.