Yield To Average Life

AAA

DEFINITION of 'Yield To Average Life'

The yield on a fixed-income security when the average maturity is substituted for the maturity date of the issue. It is particularly useful when a bond has a sinking-fund feature, as average life in this case may be significantly less than the actual number of years until maturity.

INVESTOPEDIA EXPLAINS 'Yield To Average Life'

Yield to average life enables the investor to estimate the actual return from a bond investment, regardless of the actual maturity. The yield to average life calculation assumes that the bond matures on the day given by its average life and at the average redemption price instead of the par price.

RELATED TERMS
  1. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity ...
  2. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  3. Yield To Call

    The yield of a bond or note if you were to buy and hold the security ...
  4. Yield To Worst - YTW

    The lowest potential yield that can be received on a bond without ...
  5. Sinking Fund

    A means of repaying funds that were borrowed through a bond issue. ...
  6. Class 3-6 Bonds

    Several classes of noninvestment grade bonds held by an insurance ...
Related Articles
  1. Bond Call Features: Don't Get Caught ...
    Bonds & Fixed Income

    Bond Call Features: Don't Get Caught ...

  2. Understanding Interest Rates, Inflation ...
    Bonds & Fixed Income

    Understanding Interest Rates, Inflation ...

  3. What is the difference between yields ...
    Economics

    What is the difference between yields ...

  4. Are high-yield bonds better investments ...
    Investing

    Are high-yield bonds better investments ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center