It takes into account the bond's current price, par value, coupon rate, and time to maturity.
Understanding the yield to maturity (YTM) is crucial for any investor in the bond market. This financial metric measures the annual return an investor receives when holding a bond until its maturity date. It considers various factors such as the bond's current price, face value, coupon rate, and time remaining until maturity. As a knowledgeable professor, I encourage you to calculate the YTM before investing in bonds to make informed decisions and maximize returns.
