that bonds are rarely bought and sold at par value. Actual returns depend on the price of the bond when it is sold, and bond prices are determined by the market and can fluctuate substantially. In other words, how much would you have to pay to purchase the bond today? As such, it should be clear why most investors prefer to use special programs to narrow down the interest rates rather than calculating through trial-and-error, as the calculations required to determine YTM can be quite lengthy and time-consuming. Par value: The par value of the bond. Once an investor has determined the YTM of a bond he or she is considering buying, the investor can compare the YTM with the required yield to determine if the bond is a good buy. That's because longer maturities expose the bond holder to more risk than bonds with shorter maturities.
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In this example, the par value of the bond is 100, but it is priced below the par value.92, meaning that the bond is priced at a discount. Imagine you are interested in buying a bond, at a market price that's different from the bond's par value. Details copyright m . The bond is currently priced at a discount.92, matures in 30 months, and pays a semi-annual coupon. Please try disabling, ad Block for this page, as it may be blocking the code that runs the calculator. In this case, YTM is known as the gross redemption yield. (Please tell me what you entered so I can track down and fix the problem.) * If you gave it an "A what did you like most about it, or how did it help you? Because the bond price in our example.92, the list indicates that the interest rate we are solving for is between 6 and. Please keep in mind that while the yield to maturity calculator can help you compare total returns on bonds, it cannot predict the future. Bonds, while considered to be safer than equities (stocks do carry a risk that the issuer may default on the repayment. Current price Par value Coupon rate Years to maturity Bond Yield Percentages.