Bond Yield to Maturity (YTM) Calculator

A bond's coupon rate tells you what percentage of face value it pays out each year, but it does not tell you what you actually earn if you buy the bond below or above par. Current yield and yield to maturity (YTM) are the two standard ways of translating a bond's price, coupon, and time to maturity into a single comparable return figure. Current yield is the simpler of the two: just annual coupon income divided by what you paid. Yield to maturity is more complete because it also captures the capital gain or loss you realize if you hold the bond until it pays back face value at maturity, discounted at a semiannual compounding convention that matches how most U.S. bonds actually pay.

This calculator computes current yield, the exact YTM, the annual coupon payment in dollars, total coupon cash collected over the bond's life, and the bond's modified duration and convexity, using the bond's par value, current market price, annual coupon rate, and years to maturity as inputs.

Annual coupon payment:

$$\text{Annual Coupon} = \text{Par Value} \times \text{Coupon Rate}$$

Current yield, the simplest income-only measure:

$$\text{Current Yield} = \frac{\text{Annual Coupon}}{\text{Current Price}} \times 100$$

Exact yield to maturity, solved iteratively (Newton-Raphson) rather than estimated with a closed-form shortcut. YTM is the discount rate $y$ that makes the present value of every remaining coupon and the final principal repayment, compounded semiannually, equal to today's market price:

$$P = \sum_{t=1}^{2n} \frac{C/2}{\left(1+\dfrac{y}{2}\right)^{t}} + \frac{F}{\left(1+\dfrac{y}{2}\right)^{2n}}$$

where $P$ is the current market price, $C$ is the annual coupon in dollars, $F$ is face (par) value, $n$ is years to maturity, and $y$ is the annualized yield to maturity being solved for. There is no algebraic way to isolate $y$ directly, so the calculator solves it numerically, iterating until the modeled price converges to the actual market price to within a fraction of a cent. This is the same semiannual-compounding convention a brokerage bond-pricing screen uses, so the figure this calculator shows should match what you'd see there for the same inputs.

Modified duration and convexity are also computed from the solved YTM: modified duration approximates the percentage price change for a 1% shift in yield, and convexity captures the curvature the linear duration estimate misses, more important for large yield moves or long-maturity bonds.

Bond cash flow schedule. The schedule table walks through each year from 1 to maturity, showing the annual coupon received and, in the final year, the coupon plus the return of the full face value.

Using the calculator's own default inputs:

• Par value: $1,000
• Current market price: $950
• Annual coupon rate: 5.0%
• Years to maturity: 10

Annual coupon = $1,000 × 5.0% = $50. Current yield = $50 ÷ $950 × 100 = 5.26%. Solving the semiannual-compounding pricing equation for the discount rate that reprices this bond back to $950 gives an exact yield to maturity of 5.66% — modestly higher than current yield because it also captures the $50 capital gain the bond earns as its price pulls up to $1,000 face value by maturity. Over the full 10-year holding period, total coupon cash collected is $50 × 10 = $500, on top of the $1,000 face value returned at maturity, against a $950 initial purchase price. Modified duration comes out to roughly 7.7 years, meaning a 1-percentage-point rise in yields would be expected to cut this bond's price by roughly 7.7%, before the convexity adjustment.

Compare this to a bond purchased at exactly par: a 5-year, 6.0% coupon bond priced at $1,000 has no capital gain or loss component, so current yield and YTM both equal the coupon rate exactly, 6.00% — a useful sanity check, since a par bond's YTM is always its coupon rate regardless of maturity or compounding convention. A premium bond, such as a 15-year, 7.5% coupon bond priced at $1,100, shows the opposite discount-bond effect: current yield of 6.82% is higher than the exact YTM of 6.45%, because the bondholder will lose $100 of price back to par by maturity, a drag that YTM captures but current yield ignores.

• Accrued interest and dirty price. If you buy a bond between coupon dates, the settlement price includes accrued interest owed to the seller; this calculator assumes a clean, coupon-date purchase.
• Callable, puttable, or convertible features. Yield to call, yield to put, or conversion value calculations are not modeled; this tool assumes a plain-vanilla bond held to stated maturity.
• Credit risk and default probability. The yield figures shown are purely mechanical outputs of price, coupon, and time; they say nothing about the issuer's ability to actually make those payments.
• Reinvestment risk. YTM implicitly assumes every coupon payment gets reinvested at that same yield until maturity, which is rarely true in practice as rates move over time.
• Tax treatment. Municipal bond interest, original issue discount rules, and market discount accretion can all change a bond's after-tax return in ways this pre-tax yield calculation does not capture.

• Treating current yield as your total return. Current yield ignores the capital gain or loss embedded in buying below or above par, which is exactly what YTM is designed to capture. On a discount bond, current yield understates your real return; on a premium bond, it overstates it.
• Confusing modified duration with maturity. A 10-year bond does not have 10 years of duration; duration is shorter than maturity for any coupon-paying bond because some value returns to the investor before the final payment.
• Forgetting that YTM assumes reinvestment at the same rate. The YTM calculation implicitly assumes every coupon payment gets reinvested at the same yield, which is rarely true in practice as rates move over time.
• Ignoring call risk on premium bonds. A bond priced well above par is often a candidate for early redemption by the issuer if it is callable, which would cut short the holding period this calculator assumes and change the real return.
• Comparing bonds with different maturities purely on YTM. A higher YTM on a much longer-maturity bond also carries more interest rate risk (higher duration); yield alone does not capture that risk difference.

• Fabozzi, F.J., "Bond Markets, Analysis, and Strategies," standard reference for yield measures and duration.
• Securities Industry and Financial Markets Association (SIFMA), U.S. bond market conventions.
• U.S. Securities and Exchange Commission, Investor.gov, bond yield and pricing basics.
• Federal Reserve Bank of St. Louis (FRED), Treasury yield data and market context.