- The ten-year interest rate is derived from government bonds that mature closest to ten years from now, and it is not a fixed metric but chosen by institutions like the ECB.
- A bond has a face value (par), a coupon (annual interest payment), and a maturity date; its price can fluctuate after issuance, leading to clean and dirty prices (with or without accrued interest).
- Yield to Maturity (YTM) is the interest rate that makes the present value of a bond's cash flows equal its current price; it requires iterative calculation, not a simple formula.
- The official ten-year interest rate is the YTM of a selected bond with a maturity near ten years, calculated using the dirty price (including accrued interest), while quoted bond prices are often clean prices.