Yield to Maturity (YTM)

Fundamental to any security having a marketable value is the expected return that might accrue to its owner. Higher expected returns attract greater demand from investors, for a given level of risk. We see how the term yield is often used interchangeably with the term bond price. The process by which the expected return is arrived at, and how that return can be quoted on different compounding bases is examined. Finally, we look at different interpretations of bond yields.