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MBA 503 intro to finance yield to maturity doc

# MBA 503 intro to finance yield to maturity doc - Yield to...

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Yield to Maturity 1 MBA 503: intro to finance Yield to Maturity Dr. Caryn Callahan University of Phoenix July 16, 2007

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Yield to Maturity 2 According to three mark financial accounting, Inc., “YTM [Yield to Maturity] is the most precise measure of a bond's anticipated return and determines its current market price.” YTM takes into consideration the coupon rate, current interest rate related to price, purchase of the discount rate, the current price relative to par value, and the years remaining until the bond matures. The rate calculates by dividing the dividend amount you receive annually by the amount the investment cost and stated as a percent. If the bond price is higher or lower than par the yield will differ from the interest rate. For example: if you pay \$960 for a bond with a par value of \$1,000.00 which pays 8% interest a year, or \$80.00, your yield is .083 (80.00/960.00). If you paid 1,200 for the same bond, your yield would be .067(80.00/1200.00) or 6.7%. If the bonds current yield is less than its YTM, then one states that the bond is selling
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MBA 503 intro to finance yield to maturity doc - Yield to...

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