rise to a level where that 20 annual payment brought the investor a yield.5 percent. In this case, tchibo 19 chf rabatt newsletter anm that would be 1,333.33 because 20 divided by 1,333.33 equals.5 percent. . If an investor could choose between a bond yielding 4 percent and a 2-percent bond, he would take the 4-percent bond every time. Do the Math, heres where math comes into play. . References, photo Credits, thinkstock/Comstock/Getty Images, mORE must-clicks: More Articles You'll Love). A bond selling at a discount, or below its face value, has a yield to maturity greater than its coupon rate.
What is the difference between yield to maturity and the Coupon and, yield to, maturity Difference Between, yield to, maturity and Current yield vs yield to maturity, investopedia
For a coupon bond with a principal paid at maturity, the average return per year on the bond is its annual coupon plus its average annual capital gain. The current yield is a good approximation of the bond's yield, if the bond is selling at or near its face value or if it has a long maturity. Next steps to consider Get investment analysis to help you invest in bonds. This bond-equivalent yield, though, does not take into account the reinvestment of the bond's cash flows during the year. Bank On It: The No Risk Way To Boost Your Savings.