Bond Yield Calculator
Calculate a bond's current yield and approximate yield to maturity (YTM) from its face value, coupon rate, years to maturity, and current market price. See how the price relative to face value signals a premium or discount.
Formula
Current Yield = Annual Coupon ÷ Price; YTM ≈ [Coupon + (Face − Price) ÷ Years] ÷ [(Face + Price) ÷ 2]
- Current yield is the annual coupon payment divided by the bond's current market price.
- The annual coupon equals the face value times the coupon rate.
- Yield to maturity (YTM) estimates your total annualized return if you hold the bond to maturity, including the gain or loss between price and face value.
- This uses the standard approximation for YTM; an exact YTM requires solving for the rate that discounts all cash flows back to the price.
- A price above face value means the bond trades at a premium (yield below the coupon); below face value means a discount (yield above the coupon).
$1,000 bond, 10% coupon, 5 years, priced at $950
Inputs
- Face Value: 1000
- Coupon Rate: 10 %
- Years to Maturity: 5 years
- Current Market Price: 950
The $100 annual coupon on a $950 price gives a current yield of about 10.5%. Adding the $50 gain to maturity spread over 5 years lifts the approximate YTM to roughly 11.3%.
Frequently asked questions
What is the difference between current yield and YTM?
Current yield only counts the coupon relative to price. Yield to maturity also factors in the gain or loss as the price converges to face value at maturity.
Why is the YTM here 'approximate'?
The exact YTM requires iteratively solving for the discount rate that prices all cash flows. This calculator uses a well-known closed-form approximation that is accurate for most bonds.
What does trading at a premium or discount mean?
A premium bond costs more than its face value, so its yield is below the coupon rate. A discount bond costs less, giving a yield above the coupon rate.
How is the annual coupon calculated?
Multiply the face value by the coupon rate. A $1,000 bond with a 10% coupon pays $100 per year.
Does this assume annual coupons?
Yes. The figures treat the coupon as one annual payment. Semi-annual bonds split the coupon and yield across two periods per year.
Related calculators
Future Value Calculator Future Value Calculator is a financial calculator that helps you calculate future value values from your input data. The formula used is: FV = PV × (1 + r/n)^(n×t). Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %). Present Value Calculator Present Value Calculator is a financial calculator that helps you calculate present value values from your input data. The formula used is: PV = FV / (1 + r/n)^(n×t). Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %). Opportunity Cost Calculator Opportunity Cost Calculator is a financial calculator that helps you calculate opportunity cost values from your input data. The formula used is: Chosen FV = Amount × (1 + r_chosen)^years; Opportunity Cost = Forgone FV − Chosen FV. Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %).