Yield to Maturity (YTM) Calculator
Enter the face value, bond price, annual coupon rate, coupon frequency and years to maturity to get the yield to maturity (YTM), the current yield and the total coupons.
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Yield to Maturity (YTM) Calculator
The Yield to Maturity Calculator answers one question: if you buy this bond today and hold it until it matures, what annual return will you earn? Enter the face value, the price, the annual coupon rate, how often the coupon is paid and the years left. The calculator returns the YTM together with the current yield, the effective annual yield, the coupon per period, the number of payments, the total coupons and the total received. It is built for investors comparing bonds, students learning bond valuation and analysts who want a quick check without a spreadsheet.
Quick answer
A 1,000 bond with a 6% annual coupon, bought at 1,060 with 4 years to maturity, has a yield to maturity of 4.334%.
- Meaning: the annual return from buying the bond today and holding it until it is repaid.
- How it is found: the discount rate at which all future payments are worth exactly the price.
- Price above face value: YTM is lower than the coupon rate, as in this example.
- Price below face value: YTM is higher than the coupon rate.
- Price equal to face value: YTM equals the coupon rate.
What Is Yield to Maturity?
Yield to maturity (YTM) is the annual rate of return a bond delivers when it is bought at its market price and held until the final payment. It is the most complete measure of bond return because it uses everything that affects what you earn:
- the price you pay today,
- the face (par) value repaid at maturity,
- the coupon rate and how often the coupon is paid,
- the time left until maturity.
The coupon rate only tells you the interest on the face value. YTM also counts the gain when a bond is bought below face value, or the loss when it is bought above it, and spreads that over the remaining years. This is why two bonds with the same coupon rate can have very different yields.
Yield to Maturity Formula
YTM is the rate y that makes the bond pricing equation hold:
+ ... + (C + F) ÷ (1 + r)n
r = y ÷ m
- P
- Price of the bond today.
- C
- Coupon paid each period: face value × coupon rate ÷ m.
- F
- Face value, paid with the last coupon.
- n
- Total number of payments: years × m, rounded to a whole number.
- m
- Coupon payments per year.
- y
- Yield to maturity, the number being solved for.
Each term is one future payment discounted back to today. Because y appears in every term with a different power, the equation cannot be rearranged into y = something. The calculator solves it numerically: it tests a rate, checks whether the payments are worth more or less than the price, and halves the search range until the two match.
YTM as the Rate That Prices the Cash Flows
The clearest way to see what YTM means is to list the payments. A 1,000 bond with a 6% annual coupon and 4 years left pays 60 a year and returns the 1,000 with the last coupon. It costs 1,060. Discount each payment at 4.334%:
| Year | Payment | Worth today |
|---|---|---|
| 1 | 60 | 57.51 |
| 2 | 60 | 55.12 |
| 3 | 60 | 52.83 |
| 4 | 1,060 | 894.54 |
| Total | 1,240 | 1,060.00 |
At any lower rate the payments would be worth more than 1,060, and at any higher rate less. Only one rate fits, and that rate is the YTM.
How to Calculate Yield to Maturity by Hand
- List the payments. Coupon per period = 1,000 × 6% ÷ 1 = 60, for 4 payments, plus 1,000 at the end.
- Make a first guess. The bond costs more than its face value, so the YTM is below the 6% coupon rate. A quick estimate is (60 − 60 ÷ 4) ÷ 1,030 = 4.37%, where 1,030 is the average of the price and the face value.
- Value the payments at 4%. They are worth 1,072.60. That is above 1,060, so 4% is too low.
- Value the payments at 5%. They are worth 1,035.46. That is below 1,060, so 5% is too high.
- Close in. At 4.33% the value is 1,060.15 and at 4.34% it is 1,059.78.
- Read the answer. The value matches the price at 4.334%.
A value above the price always means the rate is too low, because a lower rate discounts the payments less. The calculator repeats this test until the yield is exact to four decimal places.
Yield to Maturity Examples
A bond bought at a deep discount. Face value 1,200, price 480, coupon rate 5% paid annually, 7 years to maturity. The bond pays 60 a year, which is already 12.5% of the 480 paid, and then repays 1,200. The YTM is 23.0642%. A yield this far above the coupon rate usually means the market doubts the issuer will pay in full.
A bond bought at par. Face value 1,000, price 1,000, coupon rate 6% paid annually, 10 years to maturity. There is no gain or loss at maturity, so the YTM is exactly the coupon rate: 6%.
A bond bought at a premium. Face value 1,000, price 1,080, coupon rate 7% paid annually, 5 years to maturity. The 7% coupon looks generous, but 80 of the price is never repaid. The YTM is 5.1448%, well below the current yield of 6.4815%.
More bonds worked out with the calculator:
| Bond | YTM |
|---|---|
| 1,000 at 1,060, 6% annual 4 years | 4.334% |
| 1,000 at 965, 4% quarterly 6 years | 4.6723% |
| 1,000 at 880, 3.5% semi-annual 9 years | 5.1855% |
| 1,000 at 1,125, 8% semi-annual 6 years | 5.524% |
| 100 at 94, 2.5% annual 3 years | 4.6905% |
| 2,000 at 2,100, 5.5% monthly 10 years | 4.8675% |
| 1,000 at 650, 0% semi-annual 8 years | 5.4579% |
Amounts have no currency symbol, so the calculator works for bonds in any currency.
Where the Return Comes From
A bond held to maturity pays you in two ways: the coupons, and the difference between the face value and the price you paid. YTM turns the two into one annual rate.
| Price paid | Coupons | At maturity |
|---|---|---|
| 1,060 | 240 | Loss of 60 |
| 1,000 | 600 | No change |
| 480 | 420 | Gain of 720 |
The rows are the three bonds above: the 4 year premium bond, the 10 year par bond and the 7 year discount bond. The premium bond collects 240 in coupons but gives back 60 of it at maturity, so it earns 180 on 1,060 over 4 years and its YTM (4.334%) sits below its 6% coupon rate. The discount bond earns 420 in coupons plus 720 from the rise to face value, 1,140 on an outlay of 480, which is why its YTM is 23.0642% on a 5% coupon.
The calculator shows both parts: the Total coupons row and the Trades at row (the premium or discount).
Using YTM to Compare Two Bonds
YTM puts bonds with different prices and coupons on the same scale. Take two 1,000 bonds from similar issuers, each with 5 years left and annual coupons:
| Measure | Bond A | Bond B |
|---|---|---|
| Coupon rate | 4% | 7% |
| Price | 930 | 1,060 |
| Current yield | 4.3011% | 6.6038% |
| YTM | 5.6458% | 5.5914% |
Bond B pays the bigger coupon and has the higher current yield, yet Bond A has the higher yield to maturity, because it also gains 70 at maturity while Bond B loses 60. Judged on coupon rate alone, the comparison would point the wrong way.
YTM is not the whole decision. Credit quality, tax treatment and how long you can hold the bond matter too, and a longer bond reacts more sharply when interest rates change.
YTM and Yield to Call
Some bonds are callable: the issuer may repay them early, usually when interest rates have fallen. For those bonds the yield to call (YTC) is worked out the same way as YTM, using the call date as the end date.
If the bond is callable at its face value, enter the years until the call date in place of the years to maturity. Suppose the 1,000 bond bought at 1,060 can be called at 1,000 after 2 years:
| Held until | Yield |
|---|---|
| Maturity, 4 years | 4.334% |
| Call date, 2 years | 2.8702% |
The lower of the two, here 2.8702%, is called the yield to worst. For a bond bought at a premium, an early call hurts because the 60 premium is lost over 2 years instead of 4. If the call price is different from the face value, this calculator does not model it.
YTM, Coupon Rate and Current Yield
- Coupon rate
- Annual coupon ÷ face value. Fixed for the life of the bond. 6% in the main example.
- Current yield
- Annual coupon ÷ price. One year of income, ignoring maturity. 60 ÷ 1,060 = 5.6604%.
- YTM
- Coupons, gain or loss at maturity and timing in one rate. 4.334%.
For the income figure only, use the Bond Current Yield Calculator. To see how the yield moves as the price changes or as coupons are paid more often, see the Bond Yield Calculator. The Bond YTM Calculator covers how the years left and reinvested coupons affect the figure, and the Bond Price Calculator works the other way, from a yield to a price.
Understanding Each Input
- Face value
- The amount the bond pays back at maturity, also called par value.
- Bond price
- What the bond costs today. It can be above or below the face value.
- Coupon rate
- The fixed yearly interest as a percentage of face value. Use 0 for a zero coupon bond.
- Coupons paid
- Annually, semi-annually, quarterly, monthly, weekly or daily. The yield compounds at the same frequency.
- Years
- Time remaining until the face value is repaid. Part years such as 2.5 are accepted.
What YTM Assumes
- You hold the bond to maturity. Sell earlier and your return depends on the price on that day.
- Coupons are reinvested at the same yield. If they earn less, your realized return is lower than the YTM.
- The issuer does not default. Every coupon and the face value are paid in full and on time.
- Level coupons, whole periods. The coupon is fixed, the price carries no accrued interest and years × payments per year is rounded to a whole number of payments.
- No taxes or fees. Both reduce the return you keep.
Real outcomes can differ, but YTM remains the standard figure for comparing bonds on equal terms.
How to Use the Yield to Maturity (YTM) Calculator
- Type the face value. Enter the amount repaid at maturity, such as 1,000.
- Type the bond price. Enter what the bond costs today, such as 1,060.
- Type the annual coupon rate. Enter the coupon rate as a percentage of face value, such as 6. Use 0 for a zero coupon bond.
- Pick the coupon frequency. Choose annually, semi-annually, quarterly, monthly, weekly or daily.
- Type the years to maturity. Enter the time left until the bond is repaid, such as 4.
- Read the result. The YTM appears as you type, with the current yield, the premium or discount, the effective annual yield, the coupon per period, the number of payments, the total coupons and the total received. Press Copy to copy the YTM, or Clear or Esc to reset.
Example: a face value of 1,000, a price of 1,060, a 6% coupon paid annually and 4 years to maturity. The result is a YTM of 4.334%, a current yield of 5.6604%, a premium of 60 and total coupons of 240.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
What does yield to maturity mean?
Yield to maturity is the annual return you earn if you buy a bond at today's price, collect every coupon and hold it until the face value is repaid. It is the discount rate at which all those future payments are worth exactly the price.
How is yield to maturity calculated?
List every coupon and the final repayment, then find the rate that discounts them to the bond price. The rate is found by repeated trial. For a 1,000 bond with a 6% annual coupon and 4 years left bought at 1,060, the payments of 60, 60, 60 and 1,060 are worth 1,060 at a rate of 4.334%.
Why is the yield to maturity different from the coupon rate?
The coupon rate is interest on the face value only. YTM is based on the price actually paid and includes the gain or loss at maturity. A 6% coupon bond bought at 1,060 yields 4.334%, while a 5% coupon bond with a face value of 1,200 bought at 480 with 7 years left yields 23.0642%.
Does the YTM change if I buy the same bond at a different price?
Yes. The coupons and the face value stay the same, so a lower price means a higher YTM and a higher price means a lower YTM. A 1,000 bond with a 7% annual coupon and 5 years left yields 5.5914% at 1,060 and 5.1448% at 1,080.
How does coupon frequency affect yield to maturity?
More frequent coupons arrive sooner and the yield compounds more often, so the figure shifts slightly. The 1,000 bond bought at 1,060 with a 6% coupon and 4 years left yields 4.334% with annual coupons and 4.3495% with semi-annual coupons.
Can YTM compare bonds with different maturities?
Yes. YTM is an annual rate, so bonds with different prices, coupons and maturities can be set side by side. Longer bonds are more sensitive to interest rate changes, so compare the risk as well as the yield.
What is the difference between yield to maturity and yield to call?
Yield to maturity assumes the bond runs to its maturity date. Yield to call assumes the issuer repays it early on the call date. A 1,000 bond bought at 1,060 with a 6% annual coupon yields 4.334% over 4 years to maturity but 2.8702% if it is called at face value after 2 years.
What assumptions does YTM make?
It assumes the bond is held to maturity, every coupon is reinvested at the same yield and the issuer pays everything in full and on time. If any of these fails, the return you actually earn will differ.
Is the Yield to Maturity Calculator free?
Yes. It is free to use, with no sign-up and no limit on the number of calculations.
Sources
- Corporate Finance Institute. Yield to Maturity (YTM).
- FINRA. Understanding Bond Yield and Return.
- Investor.gov (U.S. Securities and Exchange Commission). Corporate Bonds.
- Wall Street Prep. Yield to Call (YTC).
- Wikipedia. Yield to maturity.
- Wikipedia. Internal rate of return.
Use the Yield to Maturity Calculator to find the true annual return of a bond in seconds.