Page 55 - FINAL CFA SLIDES DECEMBER 2018 DAY 14
P. 55
Session Unit 14:
52. Introduction To Fixed Income Valuation
tanties
• The current yield does not account for gains or losses as the bond’s price moves toward its par value over
time.
• Simple yield takes a discount or premium into account by assuming that any discount or premium declines
evenly over the remaining years to maturity.
• For a callable bond, an investor’s yield will depend on whether and when the bond is called:
• The yield-to-call can be calculated for each possible call date and price.
• The yield-to-worst -lowest of yield-to-maturity and the various yields-to-call!
