Yield to worst (YTW)

Definition

Yield to worst (YTW) in plain English

Some bonds can end early — the borrower might "call" it (pay you back sooner) or you might "put" it (hand it back), and each early exit gives you a different possible return. Yield to worst simply asks: across every way this bond could realistically play out, what's the LEAST I might earn? It's the pessimist's number, and cautious investors love it because it tells you the floor — the worst-case return you're signing up for. In short, it's just the smallest of the regular yield-to-maturity and all the early-exit yields, so you're never caught off guard.

Learn these first

• Callable bond
• Yield to maturity (YTM)

Related Principles of Finance terms

• Accrued interest
• Allocation effect
• Basis
• Basis point
• Benchmark
• Bond-equivalent yield (BEY)
• Bootstrapping
• Callable bond
• Clean price
• Comparable company analysis (comps)