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 £20 note The Bank of England Â£20 note is a banknote of the pound sterling. It is the second highest denomination of banknote issued by the Bank of England. The current cotton note, first issued in 2007, bears the image of Queen Elizabeth II on the obverse and the image of Scottish economist Adam Smith on the reverse. Starting in 2020, the current note will be phased out, to be replaced by a polymer note featuring a portrait of artist J. M. W. Turner in place of Smith.