Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Yield to Maturity is the total return anticipated on a bond if held until maturity, accounting for coupon payments and price difference from face value.
YTM is the effective annual return you earn from a bond if you buy it now and hold until it matures, assuming coupons are reinvested at the same rate.
YTM solves the internal rate of return equation linking bond price, periodic coupons, face value, and time to maturity. It assumes reinvestment at YTM and no default — critical for credit risk assessment in Indian corporate bonds.
You buy a ₹1,000 face value bond at ₹950 with 8% annual coupon and 3 years to maturity. YTM will be above 8% because you also gain ₹50 at maturity.
Coupon rate is the fixed interest on face value. YTM reflects actual return based on purchase price, coupons, and maturity proceeds.
Lower purchase price increases total return from coupons plus capital gain at maturity, pushing YTM higher.
Debt fund factsheets often show portfolio YTM as an indicator of expected return before expenses and credit events, not a guarantee.