Bond Yield Calculator

Find the current yield or yield-to-maturity of a bond from its market price, coupon payments, and maturity date. Essential for fixed-income investing.

Face Value

Coupon Rate (%)

Current Market Price

Years to Maturity

Results

Enter values and click Calculate to see results

How to Use This Bond Yield Calculator

Enter the bond's face value and coupon rate

Face value is the amount the bond will pay at maturity, typically $1,000. The coupon rate determines the annual interest payment.

Input the current market price and years to maturity

Market price is what you would pay to buy the bond today. Years to maturity is how long until the bond expires and returns face value.

View current yield and yield to maturity

Current yield shows annual income as a percentage of price. Yield to maturity (YTM) includes both income and any capital gain or loss at maturity.

Bond Yield Comparison Table

Bond Price vs Par	Current Yield	Yield to Maturity
At Par ($1,000)	Equals Coupon Rate	Equals Coupon Rate
At Discount ($900)	Higher than Coupon	Higher than Current Yield
At Premium ($1,100)	Lower than Coupon	Lower than Current Yield
Deep Discount	Much higher than Coupon	Includes large capital gain
Zero-Coupon Bond	0% (no coupons)	All return from price gain

For discount bonds, YTM exceeds current yield because you gain the difference between purchase price and face value at maturity. The opposite is true for premium bonds.

Understanding Bond Yields

What Is Current Yield?

Current yield is the annual coupon payment divided by the bond's current market price. It tells you the income return you get today, ignoring any capital gain or loss at maturity. A $50 annual coupon on a $950 bond gives a current yield of 5.26%.

What Is Yield to Maturity (YTM)?

YTM is the total annualized return if you hold the bond until it matures. It includes both coupon income and any capital gain or loss from the difference between purchase price and face value. YTM is the most complete measure of bond return.

Why YTM Matters More Than Current Yield

Current yield only shows income. YTM shows the full picture. If you buy a bond at a discount, YTM will be higher than current yield because you also profit from the price appreciation to par. For premium bonds, YTM is lower because you lose money at maturity.

How Price Affects Yield

Bond yields move opposite to prices. When a bond's price falls, its yield rises — you pay less for the same coupon payments. When price rises, yield falls. This inverse relationship is fundamental to bond investing and explains why bond prices drop when interest rates rise.

Tips for Evaluating Bond Yields

Compare YTM Across Similar Bonds

Use YTM to compare bonds with different prices and coupons. Two bonds with the same maturity and credit rating should have similar YTMs. Large differences may signal mispricing or different risk levels.

Watch for Call Risk on High-YTM Bonds

A bond trading at a deep discount may have a high YTM, but if it's callable, the issuer might redeem it early. Check the yield to call (YTC) as well as YTM for callable bonds.

Consider Reinvestment Risk

YTM assumes you reinvest all coupons at the same rate. If rates fall, you may not achieve the calculated YTM. This risk is higher for bonds with higher coupons and longer maturities.

Factor in Taxes and Costs

YTM is a pre-tax figure. Municipal bonds may have lower YTM but better after-tax returns for high-income investors. Also consider transaction costs and any advisory fees.

Frequently Asked Questions

What is the difference between current yield and YTM?

Current yield only measures annual coupon income as a percentage of price. YTM includes both coupon income and any capital gain or loss from holding the bond to maturity. YTM is the more complete measure of expected return.

Why is YTM higher for discount bonds?

Discount bonds trade below face value. At maturity, you receive the full face value, giving you a capital gain in addition to coupon income. This extra gain pushes YTM above the current yield. The deeper the discount, the bigger the difference.

Is a higher YTM always better?

Not necessarily. Higher YTM often means higher risk — the bond may be discounted because of credit concerns or call risk. Compare bonds with similar credit ratings and maturities. A junk bond's high YTM compensates for default risk, not superior value.

Does YTM assume I reinvest the coupons?

Yes. YTM calculations assume all coupon payments are reinvested at the same YTM rate. If you spend the coupons or reinvest at lower rates, your actual return will be less than the stated YTM. This is called reinvestment risk.

Can YTM be negative?

Yes, though it's rare. A bond can have negative YTM if it trades at such a high premium that the capital loss at maturity outweighs all coupon payments. This sometimes happens with safe-haven government bonds during flight-to-quality events.

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