Chapter 8: Measuring Yield Flashcards

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1
Q

Yield to call

A

A callable bond allows issuer to demand bond back, usually less than ytm

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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.

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3
Q

Real interest rate

A

Nominal interest rate= inflation rate

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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.

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