Bond Yield Calculator
Calculate a bond's current yield and approximate yield to maturity from face value, price, annual coupon and years, with a discount bond example.
Results · USD
Current yield
- Approx YTM
- 5.64%
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Educational estimates · not financial advice · free, no signup
How this was calculated
YTM uses the common textbook approximation.
Want more detail? Full formula notes & FAQs ↓
Detailed guide
What it is, how to use it, how to read the numbers, common mistakes, a worked example, formulas, and FAQs.
What this calculator is
Bond investors look at several yields. The coupon rate is fixed against face value. Current yield compares the annual coupon with the price you pay today. Yield to maturity adds the gain or loss from the price returning to face value at maturity. This calculator returns the current yield and an approximate YTM. For a bond bought at a discount, YTM is above current yield, which is above the coupon rate. For a premium bond the order is reversed. The YTM here is the common textbook approximation, not an exact solution. Credit quality, call features and taxes also affect real returns, and bond prices fall when market interest rates rise.
When to use / who it helps
- You are comparing a bond's income with its total expected return.
- You are screening bonds at different prices.
- You are learning how price and yield move in opposite directions.
- You want a quick estimate without a financial calculator.
- You are checking an advisor's quoted yields.
How to use
Steps
- Enter the face value.
- Enter the market price.
- Enter the annual coupon in dollars.
- Enter the years to maturity.
- Read the current yield and approximate YTM.
- Compare both with the coupon rate and other bonds.
How to interpret results
- Current yield ignores gains or losses at maturity.
- YTM includes the pull to par.
- A discount bond has YTM above current yield.
- A premium bond has YTM below current yield.
- Neither measure includes default risk.
Common mistakes & gotchas
- Entering the coupon rate instead of the dollar coupon.
- Treating current yield as total return.
- Ignoring credit risk.
- Comparing bonds with different maturities by YTM only.
- Forgetting taxes and fees.
Worked example
Worked example — $1,000 face, $950 price, $50 coupon, 10 years
- Coupon rate on face value: 50 ÷ 1,000 = 5.00%.
- Current yield: 50 ÷ 950 = 5.26%.
- Approximate YTM: [50 + (1,000 − 950) ÷ 10] ÷ [(1,000 + 950) ÷ 2] = 55 ÷ 975 = 5.64%.
- The ordering YTM 5.64% > current yield 5.26% > coupon 5.00% is typical of a discount bond.
Result: Current yield is 5.26% and the approximate YTM is 5.64%.
To load the form's own demo values, tap Try example above the Calculate button.
How to calculate / formula
YTM uses the common textbook approximation.
Frequently asked questions
What is current yield?
The annual coupon divided by the current price.
What is YTM?
The annualised return from holding a bond to maturity.
Why does YTM differ from current yield?
YTM also counts the gain or loss at maturity.
Why do prices fall when rates rise?
Existing coupons become less attractive.
Is the YTM exact?
No. It is an approximation.
Is this investment advice?
No. It is an educational calculation.