Chapter 8: Measuring Yield Flashcards
1
Q
Yield to call
A
A callable bond allows issuer to demand bond back, usually less than ytm
2
Q
Current yield
A
Annual income divided by market value of bond; if trading at premium, current yield is less than nominal yield. If trading at discount, current yield is greater than nominal yield.
3
Q
Real interest rate
A
Nominal interest rate= inflation rate
4
Q
YTM Yield to maturity
A
Return based on purchasing price of bond; if bond bought below par(at discount) the ytm is greater than its stated interest rate; if bought above then ytm is less than stated interest rate.
