If US 10yr = 2%, does it mean if I hold the bond until maturity/for next 10 years the yield is 2% or I get an annual return of 2% for 10 years?
For example the yields in the link:
https://www.investing.com/rates-bonds/world-government-bonds
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Sign up to join this communityIf US 10yr = 2%, does it mean if I hold the bond until maturity/for next 10 years the yield is 2% or I get an annual return of 2% for 10 years?
For example the yields in the link:
https://www.investing.com/rates-bonds/world-government-bonds
The yield to maturity of a bond $y$ is the constant annualised yield that you would receive if you buy the bond today at its current full price $P$ and hold it until maturity with the additional assumption that all of the coupon payments received over the life of the bond can be reinvested from the time received until maturity at this yield.
If it is 2% and $T=10$ years, then it implies that you get a 2% return every year for 10 years.
However, as we cannot know the future reinvestment yields today, there is no certainty that the yield-to-maturity $y$ will actually be realised and so we cannot know the exact yield to maturity in advance. Just see it as a best quick and dirty estimate.