Yield to Maturity (YTM) is an estimate of the annualized return you would earn if you buy a bond today and hold it until maturity, assuming the issuer makes all of its payments. It's a calculation based on assumptions: the actual return may differ and is not guaranteed.
YTM also assumes that the coupons received are reinvested at the same rate, which may not happen in practice.
It's a widely used metric for comparing bonds, because it considers both the coupons and the difference between the price you pay and the face value you would receive at maturity. It's expressed on an annualized basis.
If you sell the bond before maturity, the return you realize may be higher or lower than the YTM, depending on the sale price.
YTM depends on several factors: market conditions and supply/demand, inflation expectations, time remaining until maturity, the issuer's credit quality (credit risk), and the Federal Reserve's (Fed) benchmark rate.
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Bonds are offered through Hapi Securities LLC (member FINRA/SIPC), with custody and clearing through Apex Clearing Corporation. Hapi is self-directed and does not offer investment recommendations. Investing involves risks, including the possible loss of capital. Bonds are subject to credit, rate, and liquidity risk. Hapi Securities LLC | Member FINRA & SIPC. Not an investment recommendation.