The yield to maturity on a bond

Question

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The yield to maturity (YTM) on a bond is the expected rate of return that an investor will receive if the bond is held until maturity. It takes into account the bond's current market price, its coupon rate, and the time remaining until maturity. The YTM represents the required rate of return on the bond, meaning that it is the minimum rate at which investors would be willing to invest in the bond. It is not fixed in the indenture and can vary depending on changes in market conditions. The YTM is not necessarily equal to the coupon interest rate, which is the fixed rate that the borrower pays to the bondholder each year. Finally, the riskiness of the bond does not necessarily determine the YTM, although higher-risk bonds would generally have a higher YTM to compensate investors for taking on additional risk.

The Yield to Maturity on a Bond