Fixed Income
What is Yield to Maturity (YTM)?
YTM is the total return anticipated on a bond if held until maturity, accounting for coupon payments, face value, purchase price, and time remaining.
Formula
YTM solves: Bond Price = Σ [Coupon/(1+YTM)^t] + Face Value/(1+YTM)^n
How to Interpret
YTM is the most complete measure of bond return. Higher YTM means higher expected return but typically also higher risk.
Typical Ranges
US Treasuries: 4–5% (10Y T-Note), Investment-grade corporate: 5–6.5%, High-yield (junk): 7–10%. Or international markets like India: G-Secs 6–8%, AAA corporates 8–9%, lower-rated corporates 10–14%.