Yield To Average Life


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.

BREAKING DOWN '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.

  1. Yield To Maturity (YTM)

    The total return anticipated on a bond if the bond is held until ...
  2. Yield To Call

    The yield of a bond or note if you were to buy and hold the security ...
  3. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  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. Maturity

    The period of time for which a financial instrument remains outstanding. ...
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