The yield to maturity (YTM) is the measure of bonds rate of return that considers both the interest income and any capital gain or loss. it should be noted that yield to maturity is not same as current yield as current yield is the annual interest dividend by the bonds current value and does not account for capital gain or loss. YTM is important because it compare a bonds expected return with those of other securities available in the market. YTM considers the three sources of potential return from a bond (coupon payments, capital gains, and reinvestment returns which helps investors in Understanding how yields vary with market prices (that as bond prices fall, yields rise; and as bond prices rise, yields fall).it also helps investors to anticipate the effects of market changes on their portfolios. The yield to maturity is expressed as an annual percentage rate The following formula can be used to find out its approximate value: APPROX YTM=C+F-P/n/F+P/2 Where C=coupon value F=face value P=market price And n=years to maturity Solution The yield to maturity (YTM) is the measure of bonds rate of return that considers both the interest income and any capital gain or loss. it should be noted that yield to maturity is not same as current yield as current yield is the annual interest dividend by the bonds current value and does not account for capital gain or loss. YTM is important because it compare a bonds expected return with those of other securities available in the market. YTM considers the three sources of potential return from a bond (coupon payments, capital gains, and reinvestment returns which helps investors in Understanding how yields vary with market prices (that as bond prices fall, yields rise; and as bond prices rise, yields fall).it also helps investors to anticipate the effects of market changes on their portfolios. The yield to maturity is expressed as an annual percentage rate The following formula can be used to find out its approximate value: APPROX YTM=C+F-P/n/F+P/2 Where C=coupon value F=face value P=market price And n=years to maturity.