Bond YTM Calculator

years
Finance

Estimate a bond's yield to maturity (YTM) — the total annualized return you'd earn holding it until it matures. Enter the annual coupon, face value, current price, and years to maturity to see the approximate YTM.

Formula

Approx. YTM = [Coupon + (Face − Price) ÷ Years] ÷ [(Face + Price) ÷ 2]
  • Yield to maturity is the single annual rate that, in theory, equates the bond's price with the present value of all its future cash flows.
  • This formula is the widely used closed-form approximation — it averages the coupon income with the annualized price-to-face gain or loss.
  • The denominator (Face + Price) ÷ 2 is the average of the bond's price and its redemption value, used as the capital base.
  • A discount bond (price below face) yields more than its coupon; a premium bond (price above face) yields less.
  • For an exact YTM you must iteratively solve for the rate that discounts every coupon and the face value back to the current price.

$85 coupon, $1,000 face, $950 price, 7 years

Inputs
  • Annual Coupon Payment: 85
  • Face Value: 1000
  • Current Price: 950
  • Years to Maturity: 7 years

Approx. YTM = [85 + (1000 − 950) ÷ 7] ÷ [(1000 + 950) ÷ 2] = (85 + 7.14) ÷ 975 ≈ 9.45%.

Frequently asked questions

What is yield to maturity?
YTM is the total annualized return you'd earn if you buy a bond at its current price and hold it until maturity, collecting all coupons and the face value at the end.
Why is this YTM approximate?
The exact YTM requires solving an equation iteratively. This calculator uses the standard approximation, which is accurate enough for most decisions.
How does price affect YTM?
Buying below face value raises your yield above the coupon rate; buying above face value lowers it. Price and yield move in opposite directions.
Is YTM the same as the coupon rate?
Only when the bond trades exactly at face value. At a discount the YTM is higher; at a premium it is lower than the coupon rate.
Does this assume I reinvest coupons?
The classic YTM concept assumes coupons are reinvested at the YTM rate. Actual returns vary if reinvestment rates differ.