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Finance
Yield to Maturity
The total return you will earn on a bond if you hold it until it matures, assuming all payments are made on time.
Yield to maturity considers the purchase price, coupon payments, and the face value at maturity. It is the best single measure for comparing different bonds. It changes every day as bond prices move.
It's the real annual return you lock in today if you hold the bond all the way to the end.
Real world: You buy a bond for £920 that will pay £1,000 at maturity in 5 years plus annual coupons. The yield to maturity might be 6.2% — that's your effective annual return if you hold it until the end.
💡 Yield to maturity is the true return you get if you hold the bond until the end.