How is the yield to maturity (YTM) of a bond defined?

Yield to maturity (YTM) is defined as the total return anticipated on a bond if it is held until maturity. This metric represents the internal rate of return (IRR) of the bond, taking into account all future cash flows from the bond, which include both the annual coupon payments and the principal amount that will be received at maturity. It provides investors with a comprehensive measure of the bond's expected performance over its lifetime, allowing them to compare the profitability of different bonds or fixed-income securities.

Calculating YTM incorporates the bond's current market price, the total number of payment periods remaining, the coupon payments, and the par value that will be repaid at maturity. This allows investors to consider how shifts in market conditions can impact the bond’s return compared to other investment options.

Other options in the question do not encapsulate the full concept of YTM. The future cash flows mentioned do not account for their present value, the annual coupon payment alone does not show the bond's total return, and the market price only reflects the bond's current value without detailing the complete anticipated return if held to maturity. Therefore, option B clearly represents the comprehensive nature of YTM.