Yield to maturity
The theoretical return on a bond held to maturity, incorporating price, coupons and scheduled repayment.
Definition
The theoretical return on a bond held to maturity, incorporating price, coupons and scheduled repayment.
Why this concept matters
It helps compare bonds with different prices and coupons.
How it works
The calculation reconciles today's purchase price with all future coupons and the scheduled final repayment.
What to watch
It assumes, among other things, scheduled coupon payments and no issuer default.
Simple example
A bond bought below its redemption value may have a yield to maturity above its coupon.
Example currency : France (EUR). The reference country controls the example currency.
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