The expected return is less than the bond's yield to maturity because the yield to maturity of a bond is calculated using the promised cash flows.
What is Cash flows?
The net amount of cash and cash equivalents coming into and going out of a business is referred to as cash flows. Money spent and money received reflect inflows and outflows, respectively. Fundamentally, a company's capacity to produce positive cash flows, or more precisely, its capacity to optimize long-term free cash flow, determines its potential to create value for shareholders (FCF). FCF is the cash a firm generates from its regular business activities after deducting any funds used for capital expenditures.
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