№ 025 · Investing cluster
Bond Yield Calculator
A bond’s coupon rate is fixed, but its yield is not — it moves with the price you pay. Enter the face value, coupon, maturity, and market price to get the current yield and the yield to maturity: the one rate that values every coupon plus the face repayment, and the right number to compare bonds by.
Current yield · yield to maturity
Want the insured, fixed-term version of fixed income? Compare against a CD. Measuring a stock trade instead? The Stock Return Calculator. For income from stocks rather than bonds, the Dividend Calculator.
The bond01
$
%
The market02
$
Yield to maturity · discount
5.662%
5.263% current yield5% coupon+$50.00 at maturity
Yield to maturity5.662%
Current yield5.263%
Annual coupon$50.00
At maturity+$50.00
Price vs par
Market price$950.00
Face value (par)$1,000.00
Trading below par — you collect the coupon and a gain at maturity, so the yield beats the coupon rate.
The cash flows
| Cash flow | Amount |
|---|---|
| Price you pay now | -$950.00 |
| Coupons over 20 periods | +$500.00 |
| Face value at maturity | +$1,000.00 |
| Capital gain / loss at maturity | +$50.00 |
How it works · methodology
The math, in the open.
current yield = annual coupon ÷ price
YTM solves: price = Σ coupon/(1+y/k)^t + face/(1+y/k)^N
(t = 1…N periods, k = coupons per year)
reported YTM = the per-period rate × k (bond-equivalent yield)- coupon
- Payment per period = face × rate ÷ frequency
- price
- Current market price
- face
- Par value repaid at maturity
- N
- Total periods = years × frequency
- k
- Coupon payments per year
Assumptions & limits
- Assumes every coupon and the face value are paid in full and on time — no default (credit) risk.
- YTM assumes you hold to maturity and reinvest coupons at the same YTM (reinvestment risk is ignored).
- No taxes, call features, or accrued interest are modeled; a callable bond’s yield to call can be lower.
- The yield is solved numerically; dollar figures are exact.
By the MintNumber Editorial Team·Reviewed
Frequently asked
Questions about bond yields
What is the difference between coupon rate, current yield, and yield to maturity?
The coupon rate is fixed — it is the annual interest the bond pays as a percent of its face value, and it never changes. The current yield divides that same coupon by what you actually pay for the bond today, so it rises when the price falls. Yield to maturity goes furthest: it is the single rate that accounts for every coupon and the gap between your purchase price and the face value you collect at maturity. YTM is the number to compare bonds by, because it captures the total return if you hold to the end.
How is yield to maturity calculated?
YTM is the discount rate that makes the present value of all the bond’s future cash flows — every coupon plus the face value at maturity — equal to its current price. Unlike current yield there is no simple formula to solve for it directly; it has to be found by iteration, the same internal-rate-of-return technique a spreadsheet uses. This calculator does that root-finding for you and annualizes the result by the coupon frequency, the standard "bond-equivalent" convention for U.S. bonds.
Why does a bond priced below par yield more than its coupon?
Because you collect two kinds of return, not one. A bond bought at a discount pays its fixed coupons and also returns the full face value at maturity, which is more than you paid — a built-in capital gain. That gain lifts the total return above the coupon rate, so the yield to maturity exceeds it. The reverse happens at a premium: you pay more than face value and get only par back, a small loss that drags the yield below the coupon rate.
Does YTM assume I reinvest the coupons?
Yes, and that is its main limitation. Yield to maturity is the return you earn only if you hold the bond to maturity and reinvest every coupon at that same YTM. In reality you might reinvest at higher or lower rates depending on where interest rates go — this is called reinvestment risk. YTM remains the best single yardstick for comparing bonds, but treat it as a benchmark rather than a guarantee of your realized return.
Does this account for taxes, credit risk, or call features?
No — it assumes the issuer pays every coupon and the face value in full and on schedule, with no taxes. Real bonds carry credit risk (the issuer may default), many are callable (the issuer can repay early, capping your gain), and interest is usually taxable unless the bond is a municipal. For a callable bond, the more conservative figure to watch is the yield to call. Use this as a clean baseline and adjust for those features separately.
How does a bond compare to a CD?
Both pay a fixed income, but a bond trades on a market, so its price moves with interest rates and its yield to maturity can differ from its coupon — and the issuer can default. A certificate of deposit is simpler: a fixed rate for a fixed term from an FDIC-insured bank, with no market price to track. If you want the predictable, insured version of fixed income, compare the bond’s YTM against a CD’s APY.