Yield to maturity
The annualized return on a bond bought at today's price and held to maturity, counting coupons and price difference.
Where it is explained in full
Bonds and Treasuries: lending money, with a price that moves. A bond is a loan you make. The interest is fixed, the price is not, and the relationship between the two confuses nearly everyone the first time.
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Words beside it
- High yield savings account
A savings account paying a competitive rate, usually online.
- Maturity
When a bond pays back its face value.
- maturity date
The specific day when a bond's loan period ends and the borrower must return the full amount they originally borrowed to you. Think of it like an expiration date on the loan agreement.
- Yield
Income as a percent of price: a bond's interest, a stock's dividend, a property's rent.
- Yield curve
Rates plotted against maturity. When short rates exceed long rates it is inverted, which has preceded recessions.
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