Is the decision to purchase a bond based on the yield to maturity?

When the interest rate you expect to get based on substitute investments is less than the yield to maturity should you buy a bond (generally speaking)?

Yes, you should use YTM...

BUT I'd be very wary of buying individual bonds because the spreads on them are RIDICULOUS and you will get robbed unless you're talking 100 lot orders (100k $).

Stick to low expense bond funds or bond ETFs IMO

I know I didn't entirely answer your question but it is a complicated question and my general answer overrides your complicated question :)

ps 80/20 stocks/bonds and you can't go wrong over time

There are a lot of risks with bonds. If it's not a government bond, there is credit risk (the bond issuer may default). There is interest rate risk (if rates rise, the market value of your bond falls). There is re-investment rate risk (if rates fall, and your bond is called, you cannot re-invest at the same rate). And that takes me to the answer to your question: If the bond is callable, yield to maturity is irrelevant. Look for YTW -- the yield to worst.

Also, the other Andy is right, buying an individual bond is pricey unless you are buying in big lots.

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