If the yield-to-maturity (YTM) on a bond is 5%, is the effective annual rate (EAR) on the cash flows associated with the bond also 5%?

I know that YTM does account for the present value of a bond's future coupon payments. Does the effective annual rate on cash flows associated with a bond not reflect this?

  • $\begingroup$ The yields of US Govt bonds are based on semi-annual compounding, the EAR calculation converts it to an equivalent annual rate (so it is going to be slightly higher than 5%, namely -1+(1+0.05/2)^2 = 5.0625% $\endgroup$ – noob2 Feb 25 at 3:47

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