Yield to Maturity

Yield to maturity measures the total overall return on a bond, if the bond is purchased at today’s market price and held until its maturity date. It comprises of both the yearly interest the investor earns, and the difference between what the investor paid for the bond and the amount the investor receives at the bond’s maturity. It is often referred to as the yield or basis, so a five percent yield to maturity means the same as a five percent yield or five percent basis.

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