What is the difference between YTC, YTM, and Coupon?

What is the difference between YTC, YTM, and Coupon?

1. Yield to Call (YTC): Yield to Call is the yield an investor can expect to receive if the issuer calls a bond before its maturity date. YTC considers the bond's current market price, the call price, and the time remaining until the call date. It represents the annualized return on a callable bond if it is called at the earliest opportunity. 

2. Yield to Maturity (YTM): Yield to Maturity is the total return an investor can expect to receive if they hold a bond until its maturity date, assuming all coupon payments are reinvested at the bond's yield. YTM considers the bond's current market price, its face value, the coupon rate, and the time remaining until maturity. It represents the annualized return on the bond over its entire holding period.

3. Coupon: The coupon is the fixed annual interest payment paid by the issuer to the bondholder, expressed as a percentage of the bond's face value. The coupon rate is set when the bond is issued and remains constant throughout the bond's life. Coupon payments are typically made semiannually or annually, depending on the terms of the bond.



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