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Definition The yield to maturity (YTM) of a bond is the internal rate of return (IRR) if the bond is held until the maturity date In other words, YTM can be defined as the discount rate at which the present value of all coupon payments and face value is equal to the current market price of a bondOn the other, the bond valuation formula for deep discount bonds or zerocoupon bonds can be computed simply by discounting the par value to the present value, which is mathematically represented as,Use the formula, where, P = the bond price, C = the coupon payment, i = the yield to maturity rate, M = the face value and n = the total number of coupon payments If you plug the 1125 percent YTM into the formula to solve for P, the price, you get a price of $ A lower yield to maturity will result in a higher bond price Free Bond Valuation Yield To Maturity Spreadsheet Yield to maturity calculator for bonds