Yield to Maturity (YTM) refers to the expected rate of return a bondholder will receive if they hold a bond all the way until maturity while reinvesting all coupon payments at the bond yield. It is generally given in terms of Annual Percentage Rate (APR), and it is an estimation of future return, as the rate at which coupon payments can be reinvested at is unknown. However, for zero coupon bonds, the yield to maturity and the rate of return are equivalent since there are no coupon payments to reinvest.
Another way of putting it is that the yield to maturity is the rate of return that makes the present value (PV) of the cash flow generated by the bond equal to the price. Yield to maturity is widely used by investors as a way to compare bonds with different face values, coupon payments, and time till maturity.
Conceptually, calculating yield to maturity is very similar to calculating an internal rate of return (IRR), and is relatively straightforward. Set the bond price equal to the coupon payments and par value discounted at the yield to maturity, and solve for yield to maturity. However, solving for the yield to maturity can be prohibitively difficult and time consuming without either a computer program or advanced calculator.
Fortunately, most bonds pay coupons on a fixed schedule (generally quarterly, semi-annually, or annually). As a result, its coupon payments take the form of an annuity, whose present value is easier to calculate. In practice, bonds paying coupons will pay them according to a fixed schedule, allowing investors to estimate yield to maturity using an annuity table.