Yield to Maturity

Yield to Maturity (YTM) represents the total return an investor can expect if they hold the bond until maturity. It is expressed as a percentage.

It takes into account the bond's current market price, its face value, the coupon rate, and the time remaining until maturity.

YTM is considered the most comprehensive measure of a bond's potential return because it incorporates both the periodic coupon payments and any capital gain or loss from the difference between the purchase price and the bond's face value.

YTM is inversely related to the bond's current market price. If a bond is trading at a premium (above its face value), the YTM will be lower than the coupon rate. If a bond is trading at a discount (below its face value), the YTM will be higher than the coupon rate.