Yield to Maturity

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Yield to Maturity

Yield to Maturity is the amount of interest you will earn if you keep a debt instrument the full term.

John bought a 10 year $10,000 bond that pays 5% interest. If he keeps the bond the full 10 years, his yield to maturity will be 5%. If John sells the bond before the 10 years are up, he will make a profit or loss on the sale of the bond which will affect his yield.

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