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Yield to maturity is the expected or anticipated rate of return on a bond if it is held until the maturity date. Many investors do not understand yield to maturity and how it is calculated. There are various factors used to calculate the yield to maturity, the calculation involves the current market price, coupon interest rate, par value and time to maturity. It is considered as a long-term bond yield expressed as an annual rate. The yield to maturity is an assumption that the bond will be held until maturity, that all the principle and coupon payments will be made and coupon payments will be reinvested at the bond's promised yield at the same rate as invested. In other words, it is a measurement of the return of the bond.

Through complex calculations involving trial and error, the approximate yield can be found. The calculation of yield to maturity is quite identical to the calculation of internal rate of return:

>If the current yield value of the bond is equal its yield to maturity, the bond selling at par.

> If the current bond yield is more than its yield to maturity, so that the bond is selling at a premium.

> If the current value of the bond yield is less than its yield to maturity, then the bond will be sold at a discount.

Using a table of return can be related to the estimated yield of maturity. But, as already mentioned, it takes a lot of calculations, based largely on trial and error. E 'complex andIt usually requires a programmable calculator business. E 'can also use a computer program, the approximate value obtained to do. The best person to help you understand the yield to maturity will be your financial advisor and consultant.

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