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Education > Dictionary > Y Terms > yield to maturity (YTM)

Dictionary

yield to maturity (YTM)

The total return an investor earns by holding a bond to maturity, expressed as an annual rate. YTM accounts for the coupon payments, the purchase price and the return of par at maturity. It is the correct number to use when comparing bonds. The formula is YTM ≈ [Annual coupon + (Par − Price) ÷ Years to maturity] ÷ [(Par + Price) ÷ 2].

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