Calculate your bond's yield to maturity (YTM) and current yield by entering the current price, par value, coupon rate, years to maturity, and payment frequency. You'll get back the YTM, current yield, and the annual coupon payment — helping you compare bond investments and understand their true return.
Yield to Maturity (YTM)
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Current Yield
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Annual Coupon Payment
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Total Coupon Payments
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Total Return
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Yield to maturity is the total return you can expect if you hold a bond until it matures, assuming all coupon payments are reinvested at the same rate. It accounts for the bond's current price, par value, coupon payments, and time to maturity, giving a more complete picture than the current yield alone.
Current yield is simply the annual coupon payment divided by the bond's current market price — it ignores the gain or loss you'd realize at maturity. YTM, on the other hand, factors in the full cash flows over the life of the bond, including any premium or discount to par value, making it a more comprehensive measure of return.
The approximate YTM formula is: YTM ≈ [Annual Coupon + (Par Value − Current Price) / Years to Maturity] / [(Par Value + Current Price) / 2]. The exact YTM is found by solving for the discount rate that makes the present value of all future cash flows equal to the current price, which typically requires iteration (Newton-Raphson method).
When interest rates rise, new bonds offer higher yields, making existing lower-coupon bonds less attractive — their prices fall to compensate. Conversely, when rates fall, existing bonds with higher coupons become more valuable, so their prices rise. This inverse relationship is a fundamental principle of bond pricing.
A bond trading below its par value is at a discount, which means its YTM will be higher than the coupon rate. A bond above par is at a premium, so its YTM will be lower than the coupon rate. When the current price equals par, YTM equals the coupon rate.
A zero-coupon bond pays no periodic interest. Instead, it is issued at a significant discount to its face value and redeems at par at maturity. The entire return comes from the difference between the purchase price and the par value received at maturity.
More frequent coupon payments (e.g. monthly vs. annually) allow investors to reinvest coupon cash flows sooner, slightly increasing the effective yield due to compounding. Our calculator accounts for your chosen payment frequency when computing YTM.
A higher YTM means a higher potential return, but it often reflects higher risk — such as a lower credit rating or longer duration. Investors should weigh YTM alongside credit quality, interest rate risk, and their own investment horizon before choosing a bond.