Finance calculator
Calculate the yield to maturity (YTM) of a bond and see current yield vs YTM comparison.
Bond’s par value at maturity, typically $1,000.
Annual interest rate stated on the bond.
What the bond is trading for today.
Time until the bond matures.
Yield to Maturity (YTM)
5.669%
Solved exactly, by iteration — not the textbook shortcut.
Formula verified 9 September 2026
Current Yield
5.263%
YTM by the Textbook Shortcut
5.641%
The (C + (F−P)/n) ÷ ((F+P)/2) estimate, shown so you can see its error.
Annual Coupon Income
$50.00
Premium (+) / Discount (−)
-$50.00
Total Return at Maturity
$550.00
Estimate only — not financial advice; lender terms, fees, and taxes vary. Read the full disclaimer ↓
The income this bond pays each year. Every year pays the coupon; the final year also returns the face value. Long maturities are sampled to keep the table readable.
| Year | Coupon | Principal returned | Total cash flow |
|---|---|---|---|
| Year 1 | $50 | $0 | $50 |
| Year 2 | $50 | $0 | $50 |
| Year 3 | $50 | $0 | $50 |
| Year 4 | $50 | $0 | $50 |
| Year 5 | $50 | $0 | $50 |
| Year 6 | $50 | $0 | $50 |
| Year 7 | $50 | $0 | $50 |
| Year 8 | $50 | $0 | $50 |
| Year 9 | $50 | $0 | $50 |
| Year 10 | $50 | $1,000 | $1,050 |
Estimates only — not financial, tax, or professional advice.
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What it calculates: Yield to Maturity (YTM), Current Yield, YTM by the Textbook Shortcut, Annual Coupon Income.
Updated 5 June 2026 · Transparent assumptions
Annual coupon = face value × coupon rate.
$1,000 face, 5% coupon, $950 price, 10-year maturity.
Annual Coupon
$50
Current Yield
$50 ÷ $950 = 5.263%
YTM (exact, solved)
5.669%
YTM (textbook shortcut)
5.641%
Discount
−$50
Bought at a $50 discount, the YTM (5.669%) exceeds the current yield (5.263%) because you also gain the $50 back at maturity. The textbook shortcut returns 5.641% — 2.8 basis points low here. That gap stays small near par but collapses badly away from it: on a 30-year bond bought at 950 with a 12% coupon the shortcut reads 12.479% against an exact 12.651%, low enough to fall below the current yield, which a true YTM on a discount bond never does; and on a one-year bond bought at 550 it understates the yield by more than 20 percentage points. Within about 15% of par it is accurate to under a tenth of a point, which is the range it was designed for.
A bond is a loan you make to a government or company. In return, the issuer promises to pay you regular interest, called the coupon, and to return the original amount, the face value, on a set maturity date.
Because the coupon and maturity are fixed at issue, a bond produces a predictable stream of cash. The uncertainty comes from the price you pay for that stream, which moves up and down in the market until maturity.
The coupon rate is set against face value and never changes, so it tells you the fixed dollar income but not the return on what you actually paid. Current yield fixes that by dividing the coupon by the current price, giving a snapshot of income relative to today’s cost.
Yield to maturity is the most complete measure. It is the single annual rate that accounts for the coupons and for the gain or loss you realise when the bond matures at face value. When prices differ from par, YTM and current yield diverge, and YTM is the figure most investors rely on to compare bonds.
A bond trades at par when its price equals its face value, which happens when the coupon matches current market rates. At par, the coupon rate, current yield, and YTM all line up.
When the coupon is below market rates, buyers will only pay less than face value, so the bond trades at a discount and its YTM rises above the coupon. When the coupon is above market rates, the bond trades at a premium and its YTM falls below the coupon. The price simply adjusts until the total return matches what the market demands.
Bond prices and yields move in opposite directions. Since the coupon is locked in, the only way an existing bond can offer a competitive return when rates rise is for its price to fall, lifting its yield to match new issues.
The reverse holds when rates fall: existing bonds with higher fixed coupons become more valuable, so their prices climb and their yields drop. Longer maturities feel this effect more strongly, because the fixed payments stretch further into the future.
This calculator uses a well-known shortcut that adds the annual coupon to the price gain or loss spread evenly over the remaining years, then divides by the average of price and face value. It is quick, transparent, and close enough for most comparisons.
The exact YTM is the discount rate that makes the present value of every coupon plus the face value equal to the current price. There is no clean algebraic solution, so it is found by iteration. For that reason the figure shown here may differ slightly from a precise calculation, especially for bonds far from par or with long maturities.
Interest-rate risk is the chance that rising rates push down the price of a bond you may need to sell before maturity. Credit risk is the chance the issuer cannot make its payments, which is why government bonds usually yield less than corporate ones.
Reinvestment risk is subtler: the headline YTM assumes you reinvest each coupon at the same rate, which may not hold if rates change. None of these affect a default-free bond held all the way to maturity, but they all matter if you trade along the way.
Income-focused investors often watch the current yield, since it reflects the cash a bond throws off relative to its price right now. It is a fast way to compare the payout of bonds you might buy today.
For judging value across bonds with different prices and maturities, YTM is the standard yardstick. Comparing a bond’s YTM against yields on similar bonds, or against your own required return, helps you decide whether the price on offer is fair.
Yield to maturity (YTM) is the total annual return you would earn if you buy a bond at its current price and hold it until it matures. It blends the coupon income with any gain or loss from buying below or above face value. Because it accounts for both, YTM is the most complete single measure of a bond’s return.
The coupon rate is fixed and set against face value, so a 5% coupon on a $1,000 bond always pays $50 a year. Current yield divides that coupon by the price you actually paid, so it rises when the price falls. YTM goes one step further and also folds in the gain or loss you realise when the bond matures at face value.
Exact. The calculator solves for the rate that sets the present value of every coupon plus the face value equal to the price, by bisection over 200 iterations. It also reports the textbook shortcut, (C + (F − P) / n) ÷ ((F + P) / 2), as a separate line so you can see how far off that shortcut is: under a tenth of a point within about 15% of par, but around 17 basis points on a 30-year bond bought at a small discount — enough that the shortcut can print a YTM below the current yield, which a true YTM on a discount bond never does — and more than 20 percentage points out on a one-year bond trading at 55% of face.
A discount means the price is below face value, which happens when the coupon is lower than current market rates; the YTM ends up above the coupon rate. A premium means the price is above face value, which happens when the coupon is higher than market rates; the YTM ends up below the coupon rate. A bond priced at face value is said to trade at par.
A bond’s coupon is fixed for life. When new bonds are issued at higher rates, an older bond paying less becomes less attractive, so its price drops until its yield matches the market. The reverse happens when rates fall. This inverse relationship between price and yield is one of the core ideas in fixed income.
Yes. The classic YTM figure assumes every coupon is reinvested at the same yield until maturity. In practice you might reinvest at higher or lower rates, so the return you actually realise can differ. This gap is known as reinvestment risk and matters more for long-dated, high-coupon bonds.
If you hold to maturity and the issuer does not default, you receive the coupons and face value as scheduled, so price swings along the way do not affect your final outcome. The two risks that remain are credit risk, the chance the issuer cannot pay, and reinvestment risk on the coupons. Selling before maturity adds interest-rate risk, since the price you get depends on rates at that moment.
Current yield gives a quick read on the income relative to today’s price, which is useful if you mainly care about cash flow. YTM is the better number for comparing bonds of different prices and maturities on a like-for-like basis. Most investors glance at the coupon for the income, then lean on YTM to judge whether a bond is fairly priced.
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Investment disclaimer
Returns are assumptions, not guarantees. Actual results may vary because of market performance, taxes, fees, inflation, and timing. This is an educational projection, not investment advice.
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Published 9 September 2026