Yield to Call (YTC)
The annualized return if the bond is held until its first call date.
What is Yield to Call (YTC)?
Calculated like yield to maturity, but to the call date and call price. For a bond trading at a premium, YTC is the lowest yield, and broker-dealers must quote the lower of YTC and YTM (the 'yield to worst').
Yield to Call (YTC): a worked example
A premium callable bond might show a 4.8% YTM but only a 4.1% YTC.
More terms in Bonds & Cash Equivalents
Certificate of Deposit (CD)
A bank time deposit paying a fixed rate for a fixed term, FDIC insured.
Commercial Paper
Unsecured short-term corporate debt, 270 days or less.
Treasury Inflation-Protected Securities (TIPS)
Treasuries whose principal adjusts with the CPI.
Zero-Coupon Bond
Sold at a deep discount, pays no interest, matures at par.
Asset-Backed Securities (ABS / MBS)
Bonds backed by pools of loans - mortgages, auto loans, credit cards.
General Obligation (GO) Bond
A municipal bond backed by the issuer's full faith, credit, and taxing power.
Revenue Bond
A municipal bond repaid only from the revenue of a specific project.
Insured Municipal Bond
A muni with third-party insurance guaranteeing principal and interest.