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Sagot :
Fixed interest for the duration of the bond Yield = 6.66 % with face value $1000 and discount price $900.
What is the annual yield on corporate bonds?
Yield to Maturity (YTM) is the gross rate of return for an investor who buys a bond at the market price and holds it to maturity. , which is the discount rate at which the sum of all future cash flows (from coupons and principal repayments) equals the price of the bond.
Formula for calculating yield = ( interest paid / price paid)
Price paid = $900
Interest paid = face value x rate of interest
= $1,000 x 6%
= $60
Yield = ( $60 / $900)
= 6.66 %
What does return mean in the financial world?
Yield refers to how much income an investment will generate, apart from capital. Commonly used to refer to the interest payments that an investor receives on bonds and dividend payments on stocks. Returns are often expressed as a percentage based on the investment's market value or purchase price.
Learn more about Corporate bond yield :
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