Principles of Finance/Section 1/Chapter 4/Bonds/YTM

Yield to Market refers to the following calculation:

Current Yield = \frac{Annual Interest Payment}{Current Price}

Yield to market is also called Current Yield.

So, for example, if you had a bond that payed $40 semiannually, and the current price of the bond was $940, the Yield to Market would be 8.51%.

Yield to Maturity is not a very good measure of a bond's value. It does not take into consideration the price paid for the bond, nor the prevailing interest rates, nor the credit rating of the bond.

Last modified on 18 July 2009, at 09:24