About the Yield to Call Calculator
Many corporate and municipal bonds are callable: the issuer can repay them early, on or after a call date, at a stated call price. If rates have fallen since the bond was issued, a call becomes likely, and the return you actually earn is the yield to call (YTC) rather than the yield to maturity. This yield to call calculator solves for the YTC from the bond’s market price, coupon, call price and time to the first call date.
It is for bond investors and advisers comparing callable bonds, especially ones trading above par. The calculator also solves the yield to maturity for the same price and reports the yield to worst — the lower of the two — which is the conservative figure brokers typically quote for callable bonds, along with the current yield and the total cash you would receive if the bond is called.
Yields are annual bond-equivalent rates compounded at the coupon frequency, and the price is the clean price on a coupon date. Times are rounded to whole coupon periods, and only the first call date is evaluated; bonds with several call dates can have a lower yield to a later call.
With the default inputs, the yield to call is 4.793%. Change any value above to recalculate instantly.
How to use the yield to call calculator
- 1Enter the bond’s face value, current market price and coupon rate.
- 2Enter the call price and the years until the first call date.
- 3Enter the years to maturity to compare with yield to maturity.
- 4Choose the coupon frequency (most US bonds pay semiannually).
- 5Use the yield to worst as the conservative return estimate.
Formula and method
Yield to call is the discount rate that makes the present value of the coupons up to the call date plus the call price equal to the bond’s current price. There is no closed-form solution, so the calculator finds the rate numerically (bisection to a tiny tolerance) and reports it as an annual rate: the periodic yield times the coupon frequency, the bond-equivalent convention used in quotes.
Yield to maturity uses the same equation with the number of periods to maturity and the face value as the final payment. Yield to worst is the lower of the two. Current yield is simply the annual coupon divided by the price and ignores any gain or loss at redemption.
- C
- Annual coupon payment (face × coupon rate)
- f
- Coupon payments per year
- n
- Number of coupon periods until the call date
- CallPrice
- Amount the issuer pays to redeem the bond at the call
Worked examples
Premium bond: 6% coupon at $1,060, callable in 4 years at $1,020
Over four years you receive eight $30 coupons ($240) and then $1,020, which against a $1,060 price is a yield to call of about 4.79%. To maturity the yield would be 5.22%, so the yield to call is the yield to worst.
Discount bond: 4.5% coupon at $980, callable at par in 5 years
Bought below par, an early call would hand you the $20 discount sooner, so the yield to call (4.96%) is higher than the yield to maturity (4.69%). Here yield to maturity is the yield to worst.
Annual-pay 7.25% bond at $1,100, call in 3 years at $1,035
Three annual coupons of $72.50 and a $1,035 call price against a $1,100 price give a yield to call of 4.71%, well below the 6.05% yield to maturity — the large premium makes the call scenario expensive for the buyer.
Frequently asked questions
What is yield to call?+
Yield to call is the annual return you earn if you buy a callable bond at today’s price, receive its coupons, and the issuer redeems it at the call price on the call date. It is calculated the same way as yield to maturity but ends at the call date.
When is yield to call lower than yield to maturity?+
When the bond trades at a premium above the call price. An early call cuts short the stream of above-market coupons and forces you to absorb the premium faster, so the yield to call is lower.
What is yield to worst?+
Yield to worst is the lowest yield you could receive without the issuer defaulting, taken across yield to maturity and the yields to each possible call date. It is the conservative yield to use when comparing callable bonds.
Why do issuers call bonds?+
Issuers usually call bonds when interest rates have fallen, so they can refinance at a lower rate. That means calls tend to happen exactly when reinvesting the proceeds is least attractive for investors.
Does this calculator handle accrued interest?+
It assumes the price is quoted on a coupon payment date with no accrued interest. Between coupon dates, use the clean price for a close approximation or the bond accrued interest calculator to find the full settlement amount.
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.