Yield to Maturity

Yield to Maturity Calculation of the rate of return to an investor in a long – term bond if it is held till maturity. Several elements are taken into consideration in this calculation: the investment, the redemption value, the interest yield, the periodicity of interest payments, and the time to maturity. Also to be taken into account is the present value of the investment and the total returns in terms of the present value, i.e. the total returns have to be discounted against inflationary fall in value, and deduction of income tax on maturity.

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