What is a Yield to Worst?
The yield to worst is understood to be the yield to maturity of a bond issue when the worst possible set of circumstances has taken place. As the lowest of all yield to maturity projections, the yield to worst makes a number of different assumptions and applies them to the yield on a bond. This approach helps to demonstrate what factors could impact the return on the bond in a negative manner. Several of the factors that are taken into consideration with a yield to worst calculation are somewhat common, while others tend to carry much less chances of ever occurring. Generally, the assumptions are presented as simple cause and effect terms. For example, if there is no prepayment associated with the bond issue, then chances are the market yield will turn out to be higher than the coupon. At the same time, if the market yield is anticipated to be below the coupon, then prepayment is assumed. Since the yield to worst represents the lowest possible quote on the yield to maturity, the calcul
