The yield to maturity ytm on a bond is the interest rate, Ask an Expert

Finance

The Yield to Maturity (YTM) on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).

5.6% annual coupon bond for $930. The bond has 10 years to maturity.

Two years from now, the YTM on your bond has declined by 1%, and you decide to sell. What price will your bond sell for? What is the HPY on your investment?

Compare this yield to the YTM when you first bought the bond. Why are they different?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93051294

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