Bond Yield Calculator
The bond, and what you pay for it
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Scenario model, not a forecast. Returns, volatility, inflation, fees, and taxes are assumptions and actual investment outcomes can be lower or negative.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the bond's face value and its annual coupon rate.
- 02
Enter the price you would actually pay and the years left to maturity.
- 03
Set coupons per year — two for most U.S. bonds.
- 04
If the bond is callable, add the call price and the years to the call date in the advanced panel.
- 05
Read the yield to maturity, solved from the price, alongside the current yield and the yield to call.
Formula
Current yield = annual coupon ÷ price. Yield to maturity is the rate y at which the sum of every discounted coupon plus the discounted face value equals the price paid — solved numerically, not rearranged.
Example
A $1,000 bond with a 5% coupon, paying twice a year, bought at $950 with 10 years left: the coupon is $50 a year, so the current yield is 5.26%. Solving for the rate that makes the future payments worth $950 today gives a 5.66% yield to maturity — the extra coming from the $50 discount pulling back to par at about $5 a year. Called at par in three years instead, it yields 6.87%.
Definitions
- Par / face value
- What the issuer repays at maturity, usually $1,000 for a corporate or municipal bond.
- Coupon
- The fixed annual interest, quoted as a percentage of face value rather than of the price you paid.
- Yield to worst
- The lower of yield to maturity and yield to call — the prudent number on a callable bond.
Good to know
Price and yield move in opposite directions
A bond's coupon is fixed at issue as a percentage of face value, so once it trades, the only way its return can adjust to the market is through its price. Buy a 5% bond below par and you collect the same $50 a year on less money invested, plus the difference back at maturity — so your yield is above 5%. Buy above par and the reverse holds: the same coupon on more money, and a loss as the price falls to par. This is the whole mechanism behind bond prices falling when rates rise. Nothing about the bond changed; the yield the market demands did, and the price moved to deliver it.
Two yields, measuring different things
Current yield is the coupon divided by the price, and it is useful for one thing only — the cash a bond throws off this year relative to what you paid. It ignores the pull to par entirely, so it flatters a premium bond and understates a discount one. Yield to maturity is the complete measure: the single rate at which every future coupon and the final principal, discounted back, equal the price you actually paid. On a $1,000 bond with a 5% coupon bought at $950 with ten years left, the current yield is 5.26% and the yield to maturity 5.66% — the extra coming from the $50 discount returning to par at about $5 a year.
Solved, not approximated
There is no closed-form rearrangement for yield to maturity: it has to be found by iteration, narrowing a bracket until the discounted cash flows match the price. The textbook shortcut — coupon plus amortized discount, divided by the average of price and par — is close on a short bond and visibly off on a long one, because it ignores when the coupons arrive. This page solves the real equation. It is also why the tool needs a positive time to maturity: with no time left there is no equation to solve, and it holds its output rather than reporting a number it cannot stand behind.
What the yield does not tell you
Yield to maturity assumes two things that often fail. The first is that you hold to maturity; sell early and your realized return is whatever the market pays that day. The second is that every coupon is reinvested at the yield to maturity itself — so in a falling-rate world your coupons land in a worse market and your actual return comes in below the quoted figure. Callable bonds add a third: the issuer will call when it suits them, which is when rates have fallen, so the prudent number is yield to worst — the lower of yield to maturity and yield to call. And no yield prices credit. An unusually high yield is usually the market's opinion that the coupon may not be paid at all.
Frequently asked questions
What is the difference between current yield and yield to maturity?
Current yield is the coupon against today's price and nothing more. Yield to maturity also counts the gain or loss as the price pulls back to par at maturity, and the timing of every coupon in between. On a discount bond YTM is higher than the current yield; on a premium bond it is lower.
Is the yield to maturity here an approximation?
No. It is solved from the price by iteration until the discounted coupons and principal equal what you paid. The textbook shortcut — coupon plus amortized discount over the average of price and par — is close but not the same number, and on a long bond the gap is visible.
What does yield to maturity assume?
That every coupon is reinvested at the yield to maturity itself, and that you hold to maturity. The reinvestment assumption is the one that most often fails: if rates fall, your coupons land in a worse market and the return you actually realize is below the quoted YTM.
Why does a callable bond need a second yield?
Because the issuer decides. If rates fall, a call is likely and your real horizon is the call date, not maturity. The convention is to plan on the lower of the two — yield to worst — because the outcome you get is the one that suits the issuer, not you.
Does this account for tax or credit risk?
No. Yield is arithmetic; credit is judgment. A high yield often means the market doubts the coupon will be paid. For the tax side, compare a municipal bond against a taxable one with the Tax-Equivalent Yield Calculator.