[Verse 1] Picture bonds like treasure maps with promises to pay Coupons flow like clockwork till the final maturity day But what's the true return you'll earn if held until the end? That's where yield-to-maturity becomes your truest friend [Chorus] Y-T-M, the IRR of bonds you see Present value equals price when discount rates agree Hold it tight, reinvest right, all coupons at the same Yield-to-maturity, the bond investor's game [Verse 2] Start with current market price, then add up all the cash Future coupons, face value too, in one calculated dash Find the rate that makes them equal when discounted back today That elusive discount rate is YTM's display [Chorus] Y-T-M, the IRR of bonds you see Present value equals price when discount rates agree Hold it tight, reinvest right, all coupons at the same Yield-to-maturity, the bond investor's game [Bridge] Three assumptions buried deep within this calculation Hold until maturity, no early liquidation Reinvest each coupon payment at the YTM rate Miss these points and your returns will deviate [Verse 3] When the price goes up, the yield goes down, inverse relationship Calculator iterations help you make that mental flip Internal rate of return dressed in different clothes YTM reveals what every bond investor knows [Chorus] Y-T-M, the IRR of bonds you see Present value equals price when discount rates agree Hold it tight, reinvest right, all coupons at the same Yield-to-maturity, the bond investor's game [Outro] From premium to discount bonds, the math remains the same Solve for that elusive rate in the YTM game
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