Part of the YtM (Yield to Maturity) formula does not make intuitive sense to me - please help me to understand where the denominator (60% of Bond price + 40% of Principal payment) is coming from: YM = [Ann. Int. pay + (Princ. pay - Bond price)/No. of yrs to maturity]/[0.6(Bond price) + 0.4(Princ. pay)] I don't see any reason to weight the Bond price in preference to the Principal payment; the only 60/40 split that I know of is in the Taxation of Currency Options/Futures - which does not apply to Bonds. Note: I am studying the Business Environment Concepts portion of the CPA exam