It is crucial to take into account how the interest rate will impact on bonds over time when valuing them. If the market rate has increased from what was originally promised, the cost of the bond is likely to increase. You can see this by looking at yield-tomaturity, which measures how much an investor gets if he holds a bond through to its maturity.
Understanding YTM also helps investors determine whether purchasing certain bonds will be worth it, as this calculation includes any possible gains or losses incurred by changes in interest rate during the period of investment. This concept is also used to determine how much money should be spent on reissuing bond as well as how much cash flow must be generated for the investor’s stated financial objectives. When evaluating bond values, it is important to consider all factors including market fluctuations before taking any action.