What is yield to maturity (YTM) and how is it calculated?
YTM is the single most-quoted bond statistic. It is also one of the most misunderstood. Here is what it actually represents.
Updated · Reviewed by Juan Otero
The direct answer
Yield to maturity (YTM) is the rate that makes a bond's future coupons and principal worth its dirty price today. Dirty price = sum of each future payment ÷ (1 + YTM S.A. ÷ 2)^(2 × years). BondTerminal quotes the result on a semi-annual basis, whatever the coupon frequency.
What YTM assumes
- You hold the bond to maturity. Selling earlier gives you a realized yield that depends on the future price, not the YTM.
- The YTM calculation does not forecast what you will earn on reinvested coupons. A realized compounded return also depends on the rates available when those coupons arrive.
- The issuer pays every cash flow in full and on time. YTM bakes in zero credit-event probability.
- For amortizing bonds, YTM includes the scheduled repayments. A callable bond's yield to worst compares those payments with its call dates.
Worked example with América Móvil 6.375% 2035
At an indicative closing clean price of 102.30 per 100 face, América Móvil 6.375% 2035 had a yield to maturity of 6.02% S.A. The settlement amount includes accrued interest, so the dirty price in the calculation was 102.7781. BondTerminal discounts each remaining coupon and the principal repayment until their total present value matches that amount.
A coupon rate tells you the contractual payment on principal. YTM answers a different question: what single discount rate matches those payments to today's settlement price? When a bond trades above par, the yield can be below its coupon rate because the buyer also pays more than the principal eventually repaid.
| Input or result | Value |
|---|---|
| Clean price per 100 face | 102.30 |
| Dirty price per 100 face | 102.7781 |
| Yield to maturity | 6.02% S.A. |
How these numbers were made
Figures as of Sep 24, 2026, settlement Sep 28, 2026, using a closing indicative clean price of 102.30. The bond terms come from offering documents in our catalog. YTM is quoted semi-annual (S.A.) over ACT/365 time. Spread uses that date's US Treasury par curve at the bond's average life. How we calculate →
Educational example, not investment advice.
Why the settlement date matters
The same screen quote can produce a different YTM if a trade settles on a different day. Accrued interest changes, and every future payment is a different number of days away. The calculator uses the settlement date for both sides of the equation. A price observed on one day and a curve observed on another also make a spread comparison harder to interpret.
Check the clean quote, accrued interest and dirty settlement price together. Then check the coupon calendar and any principal repayments. The clean versus dirty price guide walks through the amount paid on settlement. For an amortizing bond, scheduled principal payments enter the YTM alongside coupons; the final repayment is only one part of its remaining flow.
When maturity is not the quoted horizon
A callable bond can repay before its legal maturity. YTM still discounts payments through maturity, but a yield-to-call calculation replaces the later payments with the call price on a permitted date. BondTerminal compares those scenarios and may quote the lower yield as yield to worst. The callable-bond example shows both rates at the same clean price.