Calculation of Yield to Maturity (YTM)
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Face Value (Par Value) — Meaning / Symbol / Notation?
Meaning: The amount printed on the face of the bond; the principal that the issuer promises to repay at maturity.; Symbol / Notation: F
Coupon Rate — Meaning / Symbol / Notation?
Meaning: Fixed annual interest rate paid by the issuer on the face value of the bond.; Symbol / Notation: c
Coupon (Interest Amount) — Meaning / Symbol / Notation?
Meaning: Rupee value of periodic interest = Face Value × Coupon Rate.; Symbol / Notation: I = F × c
Maturity ⏳ — Meaning / Symbol / Notation?
Meaning: The pre-specified period after which the bond is repaid by the issuer.; Symbol / Notation: n
Redemption Value — Meaning / Symbol / Notation?
Meaning: Amount the bondholder receives on maturity; usually equal to face value, sometimes at a premium.; Symbol / Notation: RV / F
Market Value (CMP) — Meaning / Symbol / Notation?
Meaning: Price at which the bond actually trades in the secondary market; may differ from face value.; Symbol / Notation: CMP / P₀
Required Rate of Return — Meaning / Symbol / Notation?
Meaning: Discount rate the investor expects, also called Cost of Capital for the issuer.; Symbol / Notation: k_d
Yield to Maturity (YTM) — Meaning / Symbol / Notation?
Meaning: Single discount rate that equates the present value of all future cash flows to the current market price.; Symbol / Notation: YTM / k_d
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