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Chapter 19. Working with Bonds > Calculating Bond Yields

Calculating Bond Yields

If you plan to hold a bond to maturity, the most important investment measure is the yield, which tells you what your return on investment will be. You might think that this is just the coupon rate compounded from the settlement date to the maturity date, but that's not the case. Instead, the yield depends on the current price of the bond, with more expensively priced bonds producing lower yields than cheaper bonds (assuming that the other factors are equal).


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