A longterm debt instrument in which aborrower agrees to make payments ofprincipal and interest, on specific dates, tothe holders of the bond.

Yield to Maturity

Yield to Call

(Par Bond)

(Discount Bond)

(Premium Bond)

At maturity, the value of any bond must equalits par value.

current yield (CY)= Annual Coupon Payment / Current Payment

Capital Gains Yield(CGY) = Change in Price / Beginning Price

Expected Total Return = YTM = (Expected CY) + ( Expected CGY)

Par Value the facevalue of abond

Coupon Interest Rate the specifiednumber of dollars ofinterest paid eachyear

Maturity Date a specified dateon which the parvalue of a bondmust be repaid.

Issue date – when the bond was issued.

Yield to maturity (YTM) rate of return earnedon a bond held until maturity (also called the“promised yield”).

Yield to call (YTC) rate of return earned on abond when it is called before its maturity date.

Call Provision a provision in a bond contractthat gives the issuer a right o redeem thebonds under specified terms prior to thenormal maturity date.

STEPS :)

Annual VS Semiannual