Yield to Maturity
Yield to Maturity (YTM)
Credit & DebtThe single discount rate at which a bond's future coupons and principal repayment equal its current market price. It is the total annualised return from holding the bond to maturity.
Formula
Price = Sum of [Coupon / (1+YTM)^t] + Face Value / (1+YTM)^n
Why it matters
YTM is the bond market's price tag. Comparing a corporate bond's YTM with the government yield of the same maturity reveals the credit spread the market demands.
Indian example
Related terms
Learn the concept
Bond Pricing and Yields →From the research
What Three Years of a Cash Flow Statement Reveals That One Year Hides
A single year of cash flow is a snapshot. Three years is a story. Learn what the trend reveals about earnings quality, funding, and sustainability.
ValuationComparing Two Companies on ROE, and Why the Higher One Is Not Always Better
Two companies can report the same ROE for very different reasons. DuPont analysis shows why an ROE built on leverage is not the same as one built on quality.
ValuationWhat a High P/E Actually Implies, and When It Is a Trap
A high P/E is not simply 'expensive'. It is the market pricing in expectations. Learn how to read what a P/E implies, and the two traps that catch beginners.