How to Calculate Profit on a Bond
How to Calculate Profit on Bonds. The bond market is a complicated entity. While the idea of a bond may seem simple, the kinds of trades that it is subject to can create complexities in figuring your profits. In simple terms, a bond is something you purchase that pays you interest each year over the term of the bond. At the end of the term, when the bond matures, you get your full investment back. This is called YTM or yield to maturity. Complications come in when you buy a bond in a secondary market. Then you may pay more or less than the original, or par, price. For a basic calculation, figure your interest over the period and add or subtract the difference from par.
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