Yield to Maturity Calculator

Select Currency:

Bond Details

Face Value

$

Current Price

$

Coupon Rate (%)

Years to Maturity

Coupon Payments Annually Semi-Annually Quarterly Monthly

Yield to Maturity Results

Yield to Maturity

-

%

Annualized total return

Total Coupon Payments

-

USD

Interest payments over bond life

Total Profit

-

USD

Coupons + capital gain/loss

Bond Cash Flows

Chart will appear after calculation

Cash Flow Schedule

Period	Date	Coupon Payment	Principal	Total Payment

Bond Analysis

Price vs. Value

Price analysis will appear here...

Market Comparison

Market comparison will appear here...

Export Results

This calculator provides estimates only. Bond prices fluctuate with market conditions.

Calculation History

Date	Face Value	Current Price	Coupon Rate	YTM	Currency	Actions

No Calculation History

Your calculation history will appear here after you save calculations.

Calculation saved to history

Yield to Maturity Explained

Your Complete Guide to Understanding Bond Returns and Making Smarter Investment Decisions

What is Yield to Maturity?

Yield to Maturity (YTM) is the total return you can expect from a bond if you hold it until it matures. Think of it as the bond's "total interest rate" that includes:

• The regular interest payments (coupons) you receive
• Any profit or loss from buying the bond at a different price than its face value
• The time value of money (money today is worth more than money tomorrow)

Try Our YTM Calculator

Input your bond details to see exactly how YTM works with real numbers.

Why YTM Matters for Bond Investors

YTM is important because it helps you:

• Compare bonds: See which bond gives you better returns
• Make investment decisions: Understand the true return on your bond investment
• Price bonds: Determine if a bond is fairly priced in the market
• Plan your finances: Know exactly how much money you'll make over time

Understanding the YTM Calculator Fields

Face Value (Par Value)

What it is: The amount the bond issuer promises to pay you when the bond matures.

Example: A $1,000 face value bond means you'll receive $1,000 when it matures.

Typical values: Usually $1,000 or $100 for corporate bonds.

Current Price (Market Price)

What it is: What you actually pay for the bond today in the market.

Example: You might pay $950 for a bond with a $1,000 face value.

Key point: Bonds can trade at a discount (below face value), premium (above face value), or at par (equal to face value).

Coupon Rate (%)

What it is: The annual interest rate the bond pays, based on its face value.

Example: A 5% coupon on a $1,000 bond pays $50 per year ($25 every 6 months for semi-annual payments).

Formula: Annual Coupon Payment = Face Value × (Coupon Rate ÷ 100)

Years to Maturity

What it is: How many years until the bond matures and you get your face value back.

Example: A bond with 5 years to maturity will pay interest for 5 years, then return your principal.

Range: Bonds can have terms from 1 year to 30 years or more.

Coupon Frequency

What it is: How often the bond pays interest.

Options:

• Annually: Once per year
• Semi-annually: Every 6 months (most common in US)
• Quarterly: Every 3 months
• Monthly: Every month

The YTM Formula Explained Simply

Approximate YTM Formula

This simplified formula gives you a quick estimate:

YTM ≈ [C + (F - P)/n] ÷ [(F + P)/2]

Where:

• C = Annual coupon payment ($)
• F = Face value ($)
• P = Current price ($)
• n = Years to maturity

Real Example Calculation

Let's calculate YTM for a $1,000 bond purchased for $950 with 5% coupon and 5 years to maturity:

Annual coupon (C) = $1,000 × 5% = $50
YTM ≈ [$50 + ($1,000 - $950)/5] ÷ [($1,000 + $950)/2]
YTM ≈ [$50 + $10] ÷ [$975]
YTM ≈ $60 ÷ $975 = 6.15%

This means the bond's total return is about 6.15% per year if held to maturity.

Types of Bonds Based on YTM

Discount Bonds (Price < Face Value)

When you buy a bond for less than its face value:

• YTM > Coupon Rate
• Example: Buy a $1,000 bond for $950
• You earn extra profit when the bond matures

Premium Bonds (Price > Face Value)

When you buy a bond for more than its face value:

• YTM < Coupon Rate
• Example: Buy a $1,000 bond for $1,050
• You lose money when the bond matures (but higher coupons)

Par Bonds (Price = Face Value)

When you buy a bond exactly at its face value:

• YTM = Coupon Rate
• Example: Buy a $1,000 bond for $1,000
• Your return comes only from coupon payments

How to Use the YTM Calculator

Step 1: Enter Your Bond Details

Fill in the five main fields based on your bond information.

Step 2: Choose Your Currency

Select from 50+ currencies to see results in your local currency.

Step 3: Calculate YTM

Click "Calculate YTM" to see your total return.

Step 4: Analyze the Results

Look at the cash flow schedule and chart to understand how your money grows over time.

Step 5: Save or Export

Save calculations to history or export them for future reference.

Frequently Asked Questions (FAQs)

1. What's the difference between YTM and coupon rate?

Coupon rate is the fixed interest rate based on face value. YTM includes both coupon payments AND any gain/loss from buying at a different price than face value.

2. Is higher YTM always better?

Generally yes, but higher YTM usually means higher risk. Consider the bond issuer's credit quality and your risk tolerance.

3. What happens if I sell before maturity?

YTM assumes you hold to maturity. If you sell early, your actual return depends on market prices at the time of sale.

4. How often should I recalculate YTM?

Recalculate whenever bond prices change significantly, interest rates change, or you're considering buying/selling.

5. Can YTM be negative?

Yes, in rare cases like when bond prices are extremely high compared to coupons, or during unusual market conditions.

6. How does inflation affect YTM?

Inflation reduces the real value of future bond payments. Look for bonds with YTM higher than expected inflation.

7. What's the difference between YTM and current yield?

Current yield = Annual coupon ÷ Current price. YTM includes both coupons and the gain/loss at maturity.

8. How accurate is the YTM calculation?

Very accurate for fixed-rate bonds. It uses precise mathematical methods to account for the time value of money.

9. Can I use YTM for zero-coupon bonds?

Yes! For zero-coupon bonds, YTM comes entirely from the difference between purchase price and face value.

10. How do taxes affect YTM?

YTM shown is pre-tax. Consider after-tax YTM based on your tax bracket, as bond interest is usually taxable.

11. What's the relationship between YTM and bond prices?

When interest rates rise, bond prices fall and YTM rises. When interest rates fall, bond prices rise and YTM falls.

12. Why choose semi-annual payments?

Most US bonds pay semi-annually. More frequent payments give slightly higher effective YTM due to compounding.

13. How does credit risk affect YTM?

Bonds with higher credit risk (more likely to default) offer higher YTM to compensate for the extra risk.

14. What's a good YTM range?

Depends on the bond type. Government bonds: 2-5%. Corporate bonds: 3-8%. High-yield bonds: 6-12%.

15. How do callable bonds affect YTM?

For callable bonds, calculate Yield to Call (YTC) instead, which assumes the bond is called at the first call date.

16. Can YTM predict future returns?

YTM predicts return if held to maturity and all coupons are reinvested at the same rate. Actual returns may vary.

Key Takeaways

• YTM gives you the complete picture of bond returns
• Compare bonds using YTM, not just coupon rates
• Higher YTM usually means higher risk
• Calculate YTM before every bond investment decision
• Use our calculator to make informed investment choices

Remember: YTM is one of the most important tools for bond investors. It helps you understand exactly what you're getting from your bond investments and makes comparing different bonds much easier.

Start Calculating Your Bond Returns Today

Don't guess about your bond returns - calculate them precisely with our YTM calculator.

Try the YTM Calculator Now