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
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