Yield to Maturity

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Yield to maturity (YTM) is a measure of the total return that an investor can expect to receive on a bond if they hold the bond until it matures (reaches the end of its term). It takes into account the bond's current price, the interest payments that the bond will pay out over its lifetime, and the face value of the bond (the amount that will be paid to the investor when the bond matures).

To calculate YTM, you need to know the current price of the bond, the interest rate that the bond pays, and the number of years until the bond matures. You can then use a formula to calculate the YTM.

YTM is a useful measure for investors because it allows them to compare the potential returns of different bonds and decide which one is the most attractive investment. It is important to note that YTM assumes that the investor will hold the bond until it matures, so it may not be a good measure if the investor plans to sell the bond before it matures.

See Also