Current yield is the annual interest on an investment divided by its market price, providing a snapshot of the bond’s rate of return relative to its current price rather than its face value or yield to maturity.
The effective interest rate is a key financial metric calculated from the purchase price of a debt instrument. It provides a more precise measure of the actual yield on a bond compared to the face interest rate or coupon rate.
The gross redemption yield, also known as the effective yield or yield to maturity (YTM), represents the internal rate of return of a bond bought at a specified price and held until its maturity, excluding any taxes payable on the interest and the capital repayments.
Redemption yield, also known as yield to maturity, is a measure of the annual return an investor can expect to earn if a bond is held until maturity. It factors in both the bond's current market price and its interest payments.
Simple yield is the return equal to the nominal dollar interest divided by the market value (price) of a bond. It is an approximate, simplified rate reflecting the cost to the debtor and the return to the holder of a debt instrument.
Time value refers to the premium placed on the time an investor has to wait until an investment matures, using calculations such as the Present Value (PV). It applies to general investments as well as specific instruments like stock options.
Yield to Maturity (YTM) is the total return anticipated on a bond if it is held until it matures. YTM takes into account the bond's current market price, par value, coupon interest rate, and the time to maturity.
Yield to Maturity (YTM), often referred to as Gross Redemption Yield, is a crucial financial metric for investors, reflecting the total return expected on a bond if held until it matures.
