The yearly return if you buy now and hold to maturity
Yield to maturity is the annual return from buying at today's price and holding until the bond matures. It counts both the interest received and the gap between the price paid and the face value. Price and yield move in opposite directions: a lower price means a higher yield. Two bonds from the same issuer can yield differently if their remaining terms differ.
Pay 98 for a bond with a face value of 100 and a 1% coupon maturing in 2 years, and the yield to maturity is about 2%.
For learning, not investment advice. Decisions are your own.
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