Simple yield to maturity
The outcome of an investment computed without assuming reinvestment: coupons are simply added to the difference between par and price.
Formula
P is the full purchase price, N the par value, T the number of days to maturity. Coupons are not assumed to be reinvested, and that is the whole difference from the effective figure.
How to read the number
Closer to reality for an investor who spends the coupons rather than putting them back into the same market.
When the metric lies
Also known as: simple yield, non-compounded yield