yield to worst (YTW)

The lowest potential yield an investor can receive on a callable bond without the issuer defaulting. YTW is calculated by computing the yield to maturity and the yield to each possible call date, then taking the minimum. For bonds and preferred stocks trading at a premium to par, yield to worst typically equals the yield to the earliest call date; for those trading at a discount, it typically equals yield to maturity. YTW is the conservative baseline for comparing callable bonds.