Yield to maturity
Also called: YTM, bond yield, redemption yield
The yearly return from buying a bond at today's price and holding it to maturity, assuming every payment is made.
It includes the coupons and the gain or loss when the face value is repaid. It equals the coupon rate only when the bond's price equals its face value. When market yields rise, bond prices fall, and the reverse.
Example
A 5-year bond paying ₹70 a year on ₹1,000 and priced at about ₹960 has a yield to maturity of about 8%.
Learn more in these lessons
- Bonds and bond yieldsWhy do bond prices fall when yields rise, and what return does a bond really give?
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