Frequently Asked Questions

faq-img
searchclose

Collection Details

What is YTM in bonds?


Yield to maturity (YTM) is the expected annual rate of return on a bond if you hold the bond until its maturity date. It is calculated using the following formula:
YTM = [Annual Interest + {(Face Value–Price)/Maturity}] / [(FV+Price)/2]

An increase in YTM relates to decrease in bond prices and vice versa. YTM should not be confused with coupon rate. The coupon rate is the interest rate that the NBFC pays to a bond holder. It is fixed throughout the bond's tenure. But YTM is an estimated market rate of the bond.