Market Yield to Maturity

The market yield to maturity (often just called the market yield or market rate) is the prevailing YTM required by investors in the market for bonds of similar risk and maturity. It reflects the overall cost of borrowing for issuers and the opportunity cost of investing for buyers.

When a bond’s coupon rate is higher than the market yield, it trades above par (at a premium). When it’s lower, it trades below par (at a discount).