Finance glossary
Yield to Maturity
Definition
The total return expected on a bond if held until it matures.
Yield to Maturity is the total annualized return an investor receives if they buy a bond at the current price and hold it until maturity, assuming all coupon payments are reinvested. YTM accounts for the bond current price, par value, coupon rate, and time to maturity.
In a sentence
Because she bought the bond below par, its yield to maturity was higher than its coupon rate.
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