Yield to maturity (YTM)

Yield to maturity (YTM) — the all-in annualized rate a bond pays from today’s price to maturity: coupon income plus the capital gain (bought below par) or loss (above par) as the price pulls back to face value. The coupon says what the bond pays on paper; the YTM says what you will earn from here — it’s the number quoted on the PDEx secondary market, and the one to demand whenever anyone quotes you “6% coupon!” on an above-par bond. Held to maturity, today’s YTM is locked no matter what markets do in between.

First used in: 2.3 · Bonds and the peso ladder