The total annual return you will earn if you buy a bond at its current price and hold it until it matures. It includes both the coupon payments you receive and any gain or loss from the difference between what you paid and the face value you receive at maturity.
You buy a bond for $950 with a $1,000 face value, a 5% coupon rate, and 5 years until maturity. The yield to maturity accounts for your annual $50 coupon payments plus the $50 gain you'll make when the bond matures at $1,000.
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