Logo
Munich Personal RePEc Archive

Yield to Maturity Is Always Received as Promised

Cebula, Richard and Yang, Bill (2007): Yield to Maturity Is Always Received as Promised. Published in: Journal of Economics and Finance Education , Vol. 7, No. 1 (28 August 2008): pp. 43-47.

[thumbnail of MPRA_paper_53182.pdf]
Preview
PDF
MPRA_paper_53182.pdf

Download (3MB) | Preview

Abstract

This note comments on a misconception that yield to maturity from holding a coupon bond until maturity is only promised, but not really received, unless coupon payments are reinvested at the same rate as the (original) yield to maturity. It shows that yield to maturity is always earned no matter how coupon payments are allocated, i.e., whether spent or reinvested at any rate. It illuminates that the realized compounding yield in fact measures the yield to maturity from a combination of two investments rather from simply holding the bond itself until maturity.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.