Sample Essay

The yield to maturity is just the anticipated rate of return of the long term, interest earning securities if the owner keeps the bonds till maturity. More so, the Yield to Maturity is not usually the paying yield, therefore ought not to surprise the bondholder because in some cases it might be lower than the actual interest rate.

In addition, the actual rate of interest is usually affected by other factors hence it is not normally stationary rather keeps on changing from time to time.  Finally, how the bond varies or sells depends on the relationship between the present interest rate and the Yield To Maturity. The future payouts of an already sold bond are usually known and the only factor that changes is the asking price. By buying a bond at a lower price leads to the yield to maturity rises unexpectedly.

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