What is the difference between YTM and Coupon rates? - ProProfs Discuss
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What is the difference between YTM and Coupon rates?

Asked by R. Jones, Last updated: Mar 29, 2020

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C. Bernthal

Its kind of my job to give answers

C. Bernthal, Teacher, MA, P.hD, Seattle

Answered Aug 29, 2019

YTM means Yield to Maturity. YTM refers to the estimated tare of return that an investor can expect from a bond if the bond is held until maturity. YTM is often expressed as an annual rate. YTM calculation takes into account the amount of time remaining to maturity, the price of the bond and coupon rate.

YTM means Yield to Maturity. YTM refers to the estimated tare of return that an investor can expect
It is also expressed as a percentage of the bond value. Coupon rates refer to the amount of interest paid per year. It is the yield that is funded by fixed-income security. It is also expressed as the face value of the bond. The coupon rate is part of YTM calculation.

 

Larry Thornton

Curious about the World

Larry Thornton, Student, MBA, Los Angles

Answered Jul 23, 2019

The YTM is also known as the rate of return, which is estimated on the bond that will usually last until the maturity date. The YTM will also make sure that the percentage of the value of the bond will be correctly expressed. The coupon rate is the amount that would need to be paid every year.

The YTM is also known as the rate of return, which is estimated on the bond that will usually last
There are people who can purchase the bond at a certain discount. This will make sure that maturity will be higher than the coupon rate. Take note that the rate may sometimes be a discount rate for all of the potential future payments. The higher the yield bond that you will get, the higher the rate of maturity.

 

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