The yield to maturity for a $1,000 par value bond selling for $1,100 is 7.5%.
The yield to maturity (YTM), book yield, or redemption yield of a bond or other fixed-interest security, such as gilts, is an estimation of the total rate of return anticipated to be earned by an investor who purchases a bond at a given market price, holds it until maturity, and receives all interest payments and the capital redemption on schedule. Internal rate of return (IRR, overall interest rate) is the discount rate at which the present value of all future cash flows from the bond (coupons and principal) equals the bond's current price. Although market custom is more frequently followed, the YTM is frequently expressed in terms of annual percentage rate (A.P.R.).
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