Bond Yield Calculator
Calculate current yield, yield to maturity (YTM), and yield to call (YTC) for fixed‑coupon bonds. Enter price or target yield, choose coupon frequency, and see a full cash‑flow breakdown.
Bond yield calculator
Example: 95 = 95% of par, so a $1,000 bond costs $950 (clean price, excluding accrued interest).
Calculator will compute the fair price for this yield.
Callable bond settings (optional)
Results
Show cash‑flow schedule
| Period | Time (years) | Coupon | Principal | Total cash flow |
|---|
How this bond yield calculator works
This tool focuses on plain‑vanilla fixed‑coupon bonds. It lets you:
- Compute current yield, yield to maturity (YTM), and optional yield to call (YTC).
- Work either from a market price (solve for yield) or from a target yield (solve for price).
- Choose coupon frequency (annual, semiannual, quarterly, monthly) and see a full cash‑flow schedule.
Key formulas
1. Coupon and current yield
Annual coupon
Annual coupon = Face value × Coupon rate
Current yield
Current yield = Annual coupon / Clean price
2. Yield to maturity (YTM)
YTM is the internal rate of return (IRR) that equates the present value of all future cash flows to the current price:
Price = \(\displaystyle \sum_{t=1}^{N} \frac{C}{(1 + y/m)^t} + \frac{F}{(1 + y/m)^N}\)
- F = face value
- C = coupon per period
- y = annual yield to maturity
- m = coupon payments per year
- N = total number of periods
There is no closed‑form solution for y, so the calculator uses a numerical method (bisection) to find the yield that makes the equation hold.
3. Yield to call (YTC)
For callable bonds, YTC is computed similarly, but using the call date and call price instead of maturity and face value:
Price = \(\displaystyle \sum_{t=1}^{N_c} \frac{C}{(1 + y_c/m)^t} + \frac{F_c}{(1 + y_c/m)^{N_c}}\)
- Nc = number of periods to first call
- Fc = call price (usually at or above par)
- yc = annual yield to call
Yield to worst (YTW)
When a bond is callable, investors often look at yield to worst (YTW): the lower of YTM and YTC. This calculator highlights YTW so you can quickly see the most conservative return assumption.
Interpreting your results
- Current yield tells you the income return relative to price, ignoring capital gain or loss.
- YTM is the best single‑number summary of return if you hold to maturity and reinvest coupons at the same rate.
- YTC is crucial for callable bonds, especially when they trade above par and rates are falling.
Limitations
- Assumes fixed coupons and a single maturity (no amortizing structures).
- Assumes coupons are paid exactly on schedule and reinvested at the same yield.
- Does not model credit risk, default, or tax effects.
FAQ
What is bond yield?
Bond yield is the return you earn from holding a bond, expressed as an annual percentage. It can be measured in several ways, including current yield, yield to maturity, and yield to call.
What is the difference between coupon rate and yield?
The coupon rate is fixed when the bond is issued and is based on face value. Yield is based on the price you pay in the market. If you buy at a discount, your yield is higher than the coupon rate; if you buy at a premium, your yield is lower.
Why is YTM usually more useful than current yield?
Current yield ignores the capital gain or loss you realize when the bond matures or is sold. YTM incorporates both coupon income and price change, giving a more complete picture of your total return.
How accurate is the yield to call estimate?
Mathematically, YTC is precise given the inputs. The uncertainty lies in whether the issuer will actually call the bond. The calculator assumes the bond is called at the first call date; in reality, the issuer’s decision depends on interest rates and other factors.
Can I compare bonds with different coupon frequencies?
Yes. The calculator converts the internal rate of return to a bond‑equivalent annual yield, so you can compare annual, semiannual, quarterly, and monthly pay bonds on the same basis.