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Yield to maturity (YTM)

A bond's return assuming it is held to maturity and every coupon is reinvested.

How to read the number

It is the only correct way to compare two bonds with different coupons and maturities.

When the metric lies

The assumption that coupons are reinvested at the same rate is almost never met. For a bond with a put date, yield must be calculated to that date instead.

Also known as: yield to maturity, ytm

Related terms

Следующий шаг курса «Bonds from scratch» · разборDuration: why long bonds fall harderWhat duration actually is, how it differs from time to maturity, and how to use it when rates move.Читать дальше Предыдущий шаг: Accrued interest