#fixed #income
There is an inverse relationship between the bond’s price and its yield to maturity, all else being equal. That is, the higher the bond’s yield to maturity, the lower its price. Alternatively, the higher the bond’s price, the lower its yield to maturity. Thus, investors anticipating a lower interest rate environment (in which investors demand a lower yield-to-maturity on the bond) hope to earn a positive return from price appreciation. The reading on understanding risk and return of fixed-income securities covers these fundamentals and more.
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Yield measuresith the bond’s price. The yield to maturity can be considered an estimate of the bond’s expected return; it reflects the annual return that an investor will earn on a bond if this investor purchases the bond today and holds it until maturity. <span>There is an inverse relationship between the bond’s price and its yield to maturity, all else being equal. That is, the higher the bond’s yield to maturity, the lower its price. Alternatively, the higher the bond’s price, the lower its yield to maturity. Thus, investors anticipating a lower interest rate environment (in which investors demand a lower yield-to-maturity on the bond) hope to earn a positive return from price appreciation. The reading on understanding risk and return of fixed-income securities covers these fundamentals and more.<span><body><html> Summary
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