t is also known as redemption yield. As the name suggests, if an investment is held till its maturity date, the rate of return that it will generate will be Yield to Maturity.
Calculation of YTM is a complex process which takes into account the following key factors:
- Current Market Price
- Par Value
- Coupon Interest Rate
- Time to maturity
Despite its complexity the following formula can be used to find out its approximate value:
