What Does Yield to Maturity Mean?
The expected rate of return on a bond if it is held until the maturity date; YTM is a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate, and time to maturity. It also assumes that all coupons are reinvested at the same rate. Sometimes YTM is referred to simply as yield. Investopedia explains Yield to Maturity An investor can approximate YTM by using a bond yield table. However, because calculating a bond’s YTM is complex and involves trial and error, it usually is done with a programmable business calculator.
