Tuesday, November 17, 2015

Term of the Day: Yield To Maturity (YTM)

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November 17, 2015
Yield To Maturity (YTM)

The total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term bond yield, but is expressed as an annual rate. In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.

Breaking It Down:

Calculations of yield to maturity assume that all coupon payments are reinvested at the same rate as the...

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Related Definitions

Yield Curve
Yield To Call
Yield To Worst - YTW
Term To Maturity
Par Value

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