Yield to worst.
In plain English
Yield to worst is the smallest return a bond can give you when you account for every way it might end early, such as being called on any of its call dates, versus running to maturity. It is simply the lowest of the yield to maturity and all the possible yields to call. Analysts use it as a prudent worst-case for planning, because it assumes the issuer acts in whatever way is least favorable to you. A bond quoted at a certain yield to worst will not do worse than that unless it actually defaults.
01Why it matters
Yield to worst gives the most conservative return a bond can produce short of default, so it is the figure a careful investor uses to avoid overestimating income.
02The math, step by step
A bond has a 5 percent yield to maturity and yields to call of 4.2 and 4.6 percent at two call dates. Its yield to worst is 4.2 percent, the lowest outcome, which is what a cautious buyer plans around.
03What this is NOT
Yield to worst is NOT a guaranteed return. It is the lowest yield among the redemption scenarios short of default, a conservative floor, not a promise or the most likely outcome.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.