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Yield to maturity |
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Definition of Yield to maturityYield to maturityThe percentage rate of return paid on a bond, note or other fixed income security if you Yield to MaturityThe measure of the average rate of return that will be earned on a Yield to maturityA measure of the average rate of return that will be earned yield to maturityInterest rate for which the present value of the bond’s payments equals the price.
Related Terms:Basis pricePrice expressed in terms of yield to maturity or annual rate of return. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Bond-equivalent yieldThe annualized yield to maturity computed by doubling the semiannual yield. Internal rate of return a. The average annual yield earned by an investment during the period held. Reoffering yieldIn a purchase and sale, the yield to maturity at which the underwriter offers to sell the bonds YieldThe interest rate that makes the present value of a stream of future payments associated with an asset equal to the current price of that asset. Also called yield to maturity. See also current yield. yield curveGraph of the relationship between time to maturity and yield to maturity. Yield to worstThe bond yield computed by using the lower of either the yield to maturity or the yield to call Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Balloon maturityAny large principal payment due at maturity for a bond or loan with or without a a sinking Bond equivalent yieldBond yield calculated on an annual percentage rate method. Differs from annual Bond Equivalent YieldBond yield calculated on an annual percentage rate method Capital gains yieldThe price change portion of a stock's return. Convenience yieldThe extra advantage that firms derive from holding the commodity rather than the future. Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Current maturityCurrent time to maturity on an outstanding debt instrument. Current yieldFor bonds or notes, the coupon rate divided by the market price of the bond. current yieldAnnual coupon payments divided by bond price. Current YieldThe percentage return on a financial asset based on the current price of the asset, without reference to any expected change in the price of the asset. This contrasts with yield-to-maturity, for which the calculation includes expected price changes. See also yield. Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 dividend yield ratioCash dividends paid by a business over the most Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. Earnings yieldThe ratio of earnings per share after allowing for tax and interest payments on fixed interest Effective annual yieldAnnualized interest rate on a security computed using compound interest techniques. Effective Annual YieldAnnualized rate of return on a security computed using compound Equivalent bond yieldAnnual yield on a short-term, non-interest bearing security calculated so as to be Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Flattening of the yield curveA change in the yield curve where the spread between the yield on a long-term Held-to-Maturity SecurityA debt security for which the investing entity has both the positive High-yield bondSee:junk bond. Indicated yieldThe yield, based on the most recent quarterly rate times four. To determine the yield, divide labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co. material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); MaturityFor a bond, the date on which the principal is required to be repaid. In an interest rate swap, the MaturityThe date or the number of days until a security is due to be paid or MaturityTime at which a bond can be redeemed for its face value. MaturityThe time when a policy or annuity reaches the end of its span. Maturity dateThe date when the issuer returns the final face value of a bond Maturity DateDate on which a debt is due for payment. Maturity factoringFactoring arrangement that provides collection and insurance of accounts receivable. Maturity phaseA phase of company development in which earnings continue to grow at the rate of the maturity premiumExtra average return from investing in longversus short-term Treasury securities. Maturity spreadThe spread between any two maturity sectors of the bond market. Maturity valueRelated: par value. Non-parallel shift in the yield curveA shift in the yield curve in which yields do not change by the same Original maturitymaturity at issue. For example, a five year note has an original maturity of 5 years; one Par yield curveThe yield curve of bonds selling at par, or face, value. Parallel shift in the yield curveA shift in the yield curve in which the change in the yield on all maturities is process quality yieldthe proportion of good units that resulted from the activities expended Production yield varianceThe difference between the actual and budgeted proportions Projected maturity dateWith CMOs, final payment at the end of the estimated cash flow window. Pure yield pickup swapMoving to higher yield bonds. Realized compound yieldyield assuming that coupon payments are invested at the going market interest Relative yield spreadThe ratio of the yield spread to the yield level. Remaining maturityThe length of time remaining until a bond's maturity. Required yieldGenerally referring to bonds, the yield required by the marketplace to match available returns Return-to-maturity expectationsA variant of pure expectations theory which suggests that the return that an Riding the yield curveBuying long-term bonds in anticipation of capital gains as yields fall with the Spot curve, spot yield curveSee Zero curve. Stated maturityFor the CMO tranche, the date the last payment would occur at zero CPR. Steepening of the yield curveA change in the yield curve where the spread between the yield on a long-term Term to maturityThe time remaining on a bond's life, or the date on which the debt will cease to exist and Term to MaturityPeriod of time from the present to the redemption date of a bond. Time to maturityThe time remaining until a financial contract expires. Also called time until expiration. Weighted average maturityThe WAM of a MBS is the weighted average of the remaining terms to maturity Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. Weighted average remaining maturityThe average remaining term of the mortgages underlying a MBS. YieldThe percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest yieldthe quantity of output that results from a specified input Yield a. Measure of return on an investment, stated as a percentage of price. Yield curveThe graphical depiction of the relationship between the yield on bonds of the same credit quality Yield CurveA graphical representation of the level of interest rates for Yield curveGraph of yields (vertical axis) of a particular type of security Yield curveA graph showing how the yield on bonds varies with time to maturity. Yield curve option-pricing modelsModels that can incorporate different volatility assumptions along the Yield curve strategiesPositioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve. Yield ratioThe quotient of two bond yields. yield ratiothe expected or actual relationship between input and output Yield spread strategiesStrategies that involve positioning a portfolio to capitalize on expected changes in Yield to callThe percentage rate of a bond or note, if you were to buy and hold the security until the call date. Zero curve, zero-coupon yield curveA yield curve for zero-coupon bonds; Back-up1) When bond yields and prices fall, the market is said to back-up. BootstrappingA process of creating a theoretical spot rate curve , using one yield projection as the basis for Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Current couponA bond selling at or close to par, that is, a bond with a coupon close to the yields currently DurationThe expected life of a fixed-income security considering its coupon Floating-rate contractA guaranteed investment contract where the credit rating is tied to some variable Forward rateThe future interest rate of a bond inferred from the term Macaulay durationA widely used measure of price sensitivity to yield Market segmentation theory or preferred habitat theoryA biased expectations theory that asserts that the Substitution swapA swap in which a money manager exchanges one bond for another bond that is similar in Term premiumsExcess of the yields to maturity on long-term bonds over those of short-term bonds. Term structureThe relationship between the yields on fixed-interest
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