what is the difference between the market yield and YTM ?? are these the same??
None: they’re the same thing.
thanx
My pleasure.
Yes, for the CFA exam I would say they are the same.
I will however add that “market yield” is mostly used loosely. In a CFA exam context it is used to mean total return (coupon plus capital components) which is same as the YTM (or IRR of the bond cashflows at a point, using the most up to date price).
There are many other measures of yield e.g. coupon yield (running yield in the UK i.e. Coupon/Price) etc which may all come under the broad meaning of market yield or yield.
Hope this adds extra bit of background.
This is _ current yield _, according to CFA Institute.
good!..couldn’t remember the CFA terminology for Coupon/Price hence my use of “Running Yield”, UK, to illustrate. Will remember now…the beauty of discussion!
ok… correct me if I’m wrong.
As per my understanding, YTM is the rate of total return that u get if u hold the bond till maturity… and when we talk about market yield… its used in the context of the bonds being marked to the market , due to which we have varying market interest rate and thus the corresponding bond prices and the market yield.
p.s. i hope i’m making sense to you guys
S2000magician… could you throw some light on what i said…
The “varying market interest rate” is . . . YTM.
When you mark a security to market, the price you use is the market price, which corresponds to the market’s required YTM.