Yield to maturity is a term that defines the expected rate of return on a bond if held to full maturity date. Internal rate of return represents the financial return an individual or company expects to receive from capital investments. 1 Internal rate of return, bonds, yields 1.1 Internal rate of return Given a deterministic cash flow steam, (x 0,x 1,,x n), where x i (allowed to be positive, 0 or negative) denotes the flow at time period i (years say), we already studied the net present value, NPV = Xn i=0 x i (1+r)i. Here r is the known (annual say) interest rate available to us all. In simple terms, the internal rate of return, or IRR, is the return you will be getting from an investment if you assume that everything you get back is equal to everything you put in. For example, say an investment requires $1,000 upfront and will pay you $500 in one year and $750 in two years.