what does a bond's yield to maturity (ytm) indicate
Yield to maturity The yield to maturity (YTM), book yield or redemption yield of a bond or other fixed-interest security, such as gilts, is the (theoretical) internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond will be held until maturity, and that all coupon and principal payments will be made on schedule.[1] Yield to maturity is the discount rate at which the sum of all future cash flows from the bond (coupons and principal) is equal to the current price of the bond. The YTM is often given in terms of Annual Percentage Rate (A.P.R.), but more often market convention is followed. In a number of major markets (such as gilts) the convention is to quote annualised yields with semi-annual compounding (see compound interest); thus, for example, an annual effective yield of 10.25% would be quoted as 10.00%, because 1.05 × 1.05 = 1.1025 and 2 × 5 = 10.[2]
Bank of England £1 note The Bank of England Â£1 note was a banknote of the pound sterling. After the ten shilling note was withdrawn in 1970 it became the smallest denomination note issued by the Bank of England. The one pound note was issued by the Bank of England for the first time in 1797 and continued to be printed until 1984. The note was withdrawn in 1988 in favour of the one pound coin.