Bond Yield Calculator

Yield to maturity is the annual return you earn if you buy a bond at today's price, receive every coupon on schedule and hold it until the face value is repaid — assuming each coupon is reinvested at the same yield. It is the internal rate of return of the bond's cash flows, which is why it can compare bonds with different prices, coupons and maturities. A $950 bond paying 5% for 10 years has a YTM of 5.6617%.

There is no algebraic formula; YTM needs a numerical solver. Write the pricing equation — price = the sum of the discounted coupons plus the discounted face value — and find the yield that makes it equal the market price. This calculator uses Newton-Raphson with a bisection fallback to a tolerance of 10⁻¹⁰, usually in 5–15 steps; Excel's RATE and YIELD functions iterate the same way.

Current yield is the annual coupon divided by the price and ignores maturity; YTM also counts the gain or loss to face value and the timing of every payment. For a discount bond YTM is above current yield, for a premium bond below it, and at par they are equal. A 5% bond at $950: current yield 5.2632%, YTM 5.6617%.

Because the coupon is fixed. If you own a 10-year bond paying $50 a year and market yields rise to 6%, no one will pay $1,000 for it when new bonds pay $60; its price falls until the $50 coupon plus the gain back to par gives a 6% yield — $925.61 for a semiannual-pay bond with 10 years left. Higher market yields mean lower prices, and lower yields higher prices.

Yield to call is the annual return if the issuer redeems the bond at the call price on the call date instead of letting it run to maturity. It uses the YTM equation with the call price as the redemption value and the years to call as the term. For a premium bond it is usually lower than YTM: a 7% bond at $1,050 callable at $1,020 in 3 years yields 5.7808% to the call and 6.3179% to maturity.

Yield to worst is the lowest yield you can receive without the issuer defaulting: compute the yield to every possible redemption date — maturity, each call date, any put or sinking-fund date — and take the minimum. For a bond with no early redemption features it equals YTM. FINRA's investor guidance on callable bonds recommends checking it; with a single call date, the lower of this calculator's YTM and YTC is the yield to worst.

Bond equivalent yield restates a yield with semiannual compounding, the U.S. corporate and Treasury convention, so bonds with other payment schedules compare fairly. For an annual-pay bond with yield y, BEY = 2 × [(1 + y)^(1/2) − 1]: a 5% annual-pay bond has a BEY of 4.94%, a little lower because compounding twice a year on 4.94% gives the same 5% effective return. This calculator shows BEY whenever the bond does not pay semiannually.

Yes. YTM equals your realised return only if every coupon is reinvested at the YTM itself. If rates fall after you buy, coupons are reinvested at lower yields and the realised return ends below the quoted YTM; if rates rise, above it. That is reinvestment risk. A zero-coupon bond has none — there are no coupons to reinvest — so its yield is locked in if held to maturity, before taxes.

A discount bond trades below face value, because market yields have risen above its coupon; the buyer earns the coupon plus a gain at maturity, so YTM > current yield > coupon rate. A premium bond trades above face value, because its coupon exceeds market yields; the buyer gives up some of the price at maturity, so YTM < current yield < coupon rate. At par all three are equal.

Tax-equivalent yield is the taxable yield that would match a tax-free municipal yield: divide the muni yield by (1 − your marginal federal rate). A 3.00% muni is worth 3.00% ÷ 0.76 = 3.95% in the 24% bracket and 4.41% in the 32% bracket. Treasury interest is exempt from state income tax, so compare against a Treasury using only the federal rate; a corporate bond may call for the combined federal and state rate.

Only if you hold to maturity, the issuer pays every coupon and you reinvest each coupon at the original YTM. Sell early and the return depends on the price at sale: a 4% bond bought at par and sold two years later after yields rose to 5% shows a capital loss that pulls the holding-period return below 4%. YTM is the yield quoted on the day you buy, not a guarantee for a shorter holding period.

For a bond bought on a coupon date, use RATE and multiply by the frequency: =RATE(nper, pmt, -price, face) × frequency. A 10-year 4% semiannual bond bought at $950: =RATE(20, 20, -950, 1000) returns a semiannual rate of about 2.315%, so YTM = 4.6303%. For a purchase between coupon dates, YIELD takes settlement and maturity dates and a day-count basis and handles accrued interest.