About the Bond Yield Calculator
This bond yield calculator works out what a bond really pays you at today’s price. Enter the face (par) value, the coupon rate, the price you would pay and the years left until maturity, and it returns the exact yield to maturity (YTM), the current yield, the coupon income and your total dollar return if you hold to maturity.
It is useful for anyone comparing Treasuries, corporate bonds, municipal bonds or brokered CDs trading above or below par. A bond bought at a discount yields more than its coupon; one bought at a premium yields less. The price–yield chart shows how sensitive the price is to changes in market rates.
YTM is solved precisely (not with the shortcut approximation) assuming every coupon is paid on schedule and reinvested at the same yield, and that the bond is not called early. The approximate YTM is shown alongside so you can see how close the textbook shortcut gets.
With the default inputs, the yield to maturity (ytm) is 5.662%. Change any value above to recalculate instantly.
How to use the bond yield calculator
- 1Enter the face value (usually $1,000 per bond).
- 2Enter the annual coupon rate printed on the bond.
- 3Enter the price you would pay today and the years left to maturity.
- 4Pick how often coupons are paid — most US Treasuries and corporates pay semi-annually.
- 5Compare YTM with the current yield, then use the chart to see how the price reacts to rate changes.
Formula and method
Yield to maturity is the single discount rate y that makes the present value of all remaining coupons plus the face value equal to today’s price. There is no closed-form solution, so the calculator solves it numerically (bisection) to a fraction of a basis point. The result is quoted the way brokers quote it: the per-period yield multiplied by the number of coupons per year. The effective annual yield compounds that per-period yield instead.
Current yield ignores time and the gain or loss at maturity — it is just the annual coupon divided by price. The approximate YTM shortcut, (C + (F − P) ÷ N) ÷ ((F + P) ÷ 2), is shown for comparison; it is close for bonds near par but drifts for deep discounts or long maturities.
- P
- Current market price of the bond
- F
- Face (par) value repaid at maturity
- C
- Coupon paid each period (F × c ÷ k)
- c
- Annual coupon rate
- k
- Coupon payments per year
- n
- Number of remaining coupon periods (years × k)
- y
- Yield to maturity (annual, bond-equivalent)
Worked examples
5% coupon bond bought at $950 with 10 years left
The bond pays $25 every six months. Paying $950 for $1,000 at maturity adds a $50 gain, lifting the yield to maturity to about 5.66% — above both the 5% coupon and the 5.26% current yield. Held to maturity you collect $500 of coupons plus the $50 discount, a $550 total return.
Premium bond: 3% coupon at $1,050, 5 years
Paying a $50 premium means you lose that $50 at maturity, so although the current yield is 2.86%, the true yield to maturity is only about 1.95%. The total dollar return is $150 of coupons minus the $50 premium.
Deep-discount annual-pay bond: 4% coupon at $850, 8 years
With annual coupons of $40 and a $150 discount recovered at maturity, the exact YTM is about 6.46%. The shortcut formula gives 6.35%, showing how the approximation understates yield on deeply discounted bonds.
Frequently asked questions
What is the difference between current yield and yield to maturity?+
Current yield is only the annual coupon divided by today’s price. Yield to maturity also counts the gain or loss between the price you pay and the face value you receive at maturity, plus the timing of every cash flow, so it is the better measure of total return.
Why do bond prices fall when interest rates rise?+
A bond’s coupon is fixed. When new bonds pay higher rates, existing bonds must trade at a lower price so that their yield matches the market. The longer the maturity, the larger the price move for a given change in rates.
Is a higher YTM always better?+
Not necessarily. A high yield often compensates for higher credit risk, a longer maturity or a call feature. Compare bonds of similar credit quality and duration, and check the yield to call for callable bonds.
What does it mean when a bond trades at a discount or premium?+
A discount bond sells below face value, so its YTM is above the coupon rate. A premium bond sells above face value, so its YTM is below the coupon rate. At par, YTM equals the coupon rate.
Does YTM assume coupons are reinvested?+
Yes. YTM is an internal rate of return, so it implicitly assumes every coupon is reinvested at the same yield until maturity. If you spend the coupons or reinvest at lower rates, your realized return will differ.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.
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