Yield to Worst (YTW)

YTW is the minimum of YTM and all YTCs — it answers: 'What's the worst yield I could get?' For callable bonds, if rates drop, the issuer calls the bond and you get the lower YTC. If rates rise, the bond runs to maturity and you get YTM. YTW is the most conservative estimate of return. Why it matters: Premium callable bonds often show attractive YTM but may be called early, giving you much less. Bloomberg shows YTW as the primary yield for callable bonds. CFA L1–L2 emphasizes YTW as the appropriate yield for callable bond analysis.