The yield on a fixed-income security when the average maturity is substituted for the maturity date of the issue. It is particularly useful when a bond has a sinking-fund feature, as average life in this case may be significantly less than the actual number of years until maturity.

Yield to average life enables the investor to estimate the actual return from a bond investment, regardless of the actual maturity. The yield to average life calculation assumes that the bond matures on the day given by its average life and at the average redemption price instead of the par price.

The yield calculation of a bond that is systematically retired throughout its life. This yield replaces the stated final maturity with the average life maturity. The yield-to-average life calculation is often used in the case of a sinking fund where the issuer purchases its own bonds on the open market to fulfill its sinking fund obligations when the bonds are trading below par.

The yield-to-average life allows investors to determine the expected return when a bond is not held to maturity either because of sinking fund obligations or, in the case of mortgage-backed securities (MBS), because of the prepayment of the underlying mortgage debt. The yield-to-average life metric is used in regard to the pricing of mortgage-backed securities, such as collateralized mortgage obligations (CMOs) issued by the Federal Home Loan Mortgage Corporation and private issuers. Because an MBS generally repays principal throughout the life of the investment, the prepayment of the underlying mortgage debt can affect the investor's return (depending on whether the MBS was purchased at a discount or at a premium).

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… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

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… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

www.jstor.org [PDF]

… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

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… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

link.springer.com [PDF]

… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

www.jstor.org [PDF]

… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

onlinelibrary.wiley.com [PDF]

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onlinelibrary.wiley.com [PDF]

… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

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… bond beta is positive, as D(t) decreases (the average life of the bond), ceteris paribus … 4. . "The Effects of Dividend Yield and Dividend Policy on Common Stock Prices and … Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields, and Stock Prices …

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Yield to maturity is a measure applied to fixed income securities. It is the holder's total return, calculated assuming it is held until maturity, and assuming there is no default.

No, it does not assume anything about how often interest payments are made.

The yield on a fixed-income security when the average maturity is substituted for the maturity date of the issue.

This calculation is used in cases where bonds are systematically retired throughout their lives, such as with sinking funds.

It assumes that it matures on its average life rather than its stated final maturity date.

Dividend yield measures the past year's dividends on a stock (a share), expressed as a percentage of the share's market value.

Yield-to-average life refers to an investment strategy that involves buying a bond with a longer term than your investment horizon in order to obtain higher yields than those available on shorter-term bonds. This allows you to earn more interest over time without increasing your risk profile or sacrificing liquidity."

It assumes that the bond matures on the day given by its average life and at the average redemption price instead of par value.

Examples include bonds, preferred stocks, convertible stocks and bonds, notes and annuities.

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