MANAGEMENT GAME.....


Yield to Maturity (YTM) is the annual rate of return anticipated on a bond that a bondholder buying a bond today and holding it to maturity would receive on his investment. YTM takes into account the total of annual interests payments (coupon yield) , the purchase price, the Redemption Value, the amount of time (number of years) remaining until maturity, and the time between interest payments. Recognizing the Time Value of Money, the technique is used to determine the rate of return an investor will receive if a long term, interest-bearing investment is held to its Maturity Date. An approximate YTM can be found by using a bond yield table.



YTM is equal to the discount rate at which the Present Value of all future payments would equal the present price of the bond, also known as the Internal Rate of Return.



Note that it is assumed in the YTM rate, that the coupons are reinvested at the YTM rate. This may or may not be accurate, if the bonds are sold at prices above, or below, their Face Value or Par Value.



Also called Maturity Yield and Effective Rate of Return.



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YIELD........

It is an Investor's percentage return on security investments. For stocks, it is the return earned from common stock or preferred dividends. For bonds, it is the coupon rate of return divided by the bond purchase price.
 
ROHAN KACHALIA said:
YIELD........

It is an Investor's percentage return on security investments. For stocks, it is the return earned from common stock or preferred dividends. For bonds, it is the coupon rate of return divided by the bond purchase price.
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Dutch Auction ====is a method of selling and buying whereby a seller has multiple, identical items listed for bidding and the price is gradually lowered until it meets an acceptable level to enough buyers for the entire offering to be sold.


This type of auction is convenient when it is important to auction goods quickly, since a sale never requires more than one bid. The Dutch auction is named for its best known example, the Dutch flower auctions.



In corporate finance, the method is an interesting alternative to the traditional negotiated pricing process used by underwriters to set IPO prices. The method was successfully used by Google for its 2004 Initial Public Offering
 
Rule of 72.
The Rule of 72 is a formula that is used in investing to approximate the number of years it will take to double money at a given (compound) interest rate. The calculation works by dividing 72 by the interest percentage you will receive, giving the number of years.



Example: an investment gives an interest of 9%. The estimated time in years (t) it will take to double your investment is 72 / 9 = 8 years.

The number of 69.3 or 70 is actually better, but the number 72 has as advantage it is easily divisible by many numbers: 2, 3, 4, 6, 8, 9, and 12 and works OK for most purposes.



The exact number can be derived from the Formula Future Value = Present Value x ( 1 + Interest Rate )t

Suppose the money has doubled, this means that the Future Value then equals 2 Present Value. We can now substititute this in the formula and then cancel the factor Present Value.



This results in 2 = (1 + Interest Rate)t or: t ≈ 0,693147 / Interest Rate

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