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JL Wee

JL Wee

Level 2

15 Apr 2020

For bonds, should I yield to maturity without making the assumption of reinvesting coupon payout?

I found out that bonds YTM has the assumption that you will reinvest the coupon amount with a similar return rate. However, I find that this is quite an assumption and would like to ask is it better if we gauge the YTM without assuming the reinvestment component?

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    What are your thoughts?

    It will have to depend on the type of bond you are investing in. If you invested in a bond that re-invests the coupons instead of paying it out, you can just follow the YTM.

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