bonds 2 - Promised Yield To Call • Same as above, only...

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Bond Yields Nominal Yield Coupon rate on an issue. Current Yield Like a dividend yield, it measures annual current income as a proportion of the current market price. Promised Yield To Maturity (YTM) Measures the expected rate of return on the bond if held to maturity. It is the internal rate of return (IRR) of the bond and assumes that all income is reinvested at that same IRR until maturity (not likely).
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Unformatted text preview: Promised Yield To Call • Same as above, only calculated until call date using call premium as face value. Realized Yield (Horizon Return) • Calculating an expected return over a specified holding period, using an expected future selling price of the bond. Investors are required to estimate the holding period and the future price (through expected future YTM’s -- term structure )....
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This note was uploaded on 04/18/2008 for the course BUSI 2008 taught by Professor Dob during the Spring '08 term at Carleton CA.

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