Yield to Maturity

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Definition of 'Yield to Maturity'

When investing in bonds, the yield to maturity is the calculated return on investment that an investor will get if they hold the bond to maturity. It takes into account the present value of all future cash flows, as well as any premium or discount to par that the investor pays.

If the investor is calculating the value of a Zero Coupon Bond then there will be no cash flows and only a single redemption at maturity. In this case the yield to maturity will be calculated based on the discount to par and the par value of the bond.

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