Yield to Maturity

Categories: Bonds, Metrics, Muni Bonds

This is the money that a bondholder will enjoy by holding the bond until it matures. The amount you make assumes that the interest payments the bond gave you are all reinvested, so yield to maturity will change over time as the reinvestment rate changes.

Since there are so many variables (such as how much you'll earn when you reinvest your payments) the formula for figuring out YTM is complicated. It's a handy number to figure out, though, as it can tell you whether you're better off selling a bond early or keep it for a long while.

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