So YTM is the yield that used as a discount rate in computing the net present value of the cash flows offered from today gives you the bond price today. While the cash flows from coupon interest are fixed as to dollar amount and date and the return of face value at maturity is fixed as to dollar amount and date, the price today and the date today change every day. The result is that YTM changes every day. The formula is really the formula for bond price from which you solve for YTM by some method of successive approximations as YTM can't be extracted algebraically as a solution.
I can't quite follow the details of your comparisons, but the above definition should at least make clear what is being calculated.
I can't quite follow the details of your comparisons, but the above definition should at least make clear what is being calculated.
Statistics: Posted by dbr — Sun Sep 01, 2024 3:57 pm — Replies 1 — Views 35