QUICK DEFINITION
Yield to Maturity is the discount rate that equates a bond's current price with the present value of its remaining contractual cash flows if held to maturity.
WHY IT MATTERS
Why Yield to Maturity matters in bond markets
YTM is a standard measure for comparing fixed-rate bonds, although it assumes reinvestment and does not capture every risk.
MARKET CONTEXT
How to think about it
Bond investors use yield to maturity as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Yield to Maturity important for fixed-income investors?
← Back to the Bond Market Glossary Yes. YTM is a standard measure for comparing fixed-rate bonds, although it assumes reinvestment and does not capture every risk.