YTM vs Coupon Rate - A business and finance definition for...

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Unformatted text preview: A business and finance definition for yield to maturity rate is the interest earned by the lender on monies loaned which is expressed as a percentage of the total investment. Yield rate is determined by the amount returned to the lender of a security. The yield of a bond is influenced by the price the buyer pays to purchase it. Intuitively, buyers prefer bonds that are sold at lower prices because they have a higher yield. A higher coupon rate renders higher yield because the bond will pay a higher percentage of its face value as interest each year. Aside from price and coupon rate, yield rate is also affected by the number of years remaining till maturity, and the difference between its face value and current price. Conversely, the coupon rate of a bond is the amount of interest paid annually, expressed as a...
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