The compound rate of return that investors will receive for a bond with a maturity greater than one year if they hold the bond to maturity and reinvest all cash flows at the same rate of interest. It also takes into account purchase price, redemption value, coupon yield, and the time between interest payments. The YTM will be greater than the current yield when the bond is selling at a discount and will be less if it is selling at a premium. YTM can be approximated using a bond yield table or can be determined using a programmable calculator equipped for bond calculations.

YTM is used extensively in comparing fixed income investments, making fixed income portfolio decisions, and in financial planning.

See Also: Yield To Average Life; Yield To Call

This definition is in context to Investing. See more contextual defintions for Yield To Maturity (YTM).