Peeing in a trash can instead of walking 50 feet to the bathroom is not funny. Raiding you neighborâs cooler is not funny. Building an 8 foot tall bonfire is not funny. Asking if you can wear the park rangerâs hat is not funny. Guess whose job it is to tell them that they are not funny: the park ranger.
The main difference between yields and interest rates is that each term refers to different financial instruments. Yield commonly refers to the dividend, interest or return the investor receives from a security like a stock or bond, and is usually reported as an annual figure.
1. The yield to maturity is the required rate of return on a bond expressed as a nominal annual interest rate. For noncallable bonds, the yield to maturity and required rate of return are interchangeable terms. Unlike YTM and required return, the coupon rate is not a return used as the interest rate in bond cash flow valuation, but is a fixed percentage of par over the life of the bond used to set the coupon payment amount. For the example given, the coupon rate on the bond is still 10 percent, and the YTM is 8 percent. 2.