Is there any difference between the YTM and the IRR? I guess there should be, but I don’t manage to see it.
For example, it is clear that the YTM for a bond that is priced at $1000 with $1000 face value, and pays 10% interest during 5 years (repayment at maturity) gives us a 10% YTM. But, if rather than a bond, you have a loan (which has no actual quotation), I think it should be fine to compute the IRR of the cash-flows as an equivalent of the YTM, shouldn’t be? A $1000 loan, that pays 10% interest during 5 years and repayable at maturity gives us a 10% IRR.
However, I think there must be some differences between the YTM and the IRR. Could anyone please explain them?
Thanks in advance?
For example, it is clear that the YTM for a bond that is priced at $1000 with $1000 face value, and pays 10% interest during 5 years (repayment at maturity) gives us a 10% YTM. But, if rather than a bond, you have a loan (which has no actual quotation), I think it should be fine to compute the IRR of the cash-flows as an equivalent of the YTM, shouldn’t be? A $1000 loan, that pays 10% interest during 5 years and repayable at maturity gives us a 10% IRR.
However, I think there must be some differences between the YTM and the IRR. Could anyone please explain them?
Thanks in advance?