Question 1

What is yield to maturity?

Accepted Answer

Yield to maturity (YTM) is the total annualized return if you hold a bond until it matures. It accounts for the purchase price, coupon payments, and face value at maturity.

Question 2

How do interest rates affect bond prices?

Accepted Answer

Bond prices move inversely to interest rates. When rates rise, existing bonds with lower coupons lose value. When rates fall, bond prices rise.

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