Yield to Maturity Calculator
Estimate a bond's yield to maturity and current yield.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
Yield to maturity, or YTM, is the total return you earn holding a bond until it matures, and this calculator estimates it. You enter the bond's face value, current price, annual coupon rate, and years to maturity, and it returns an approximate YTM, the current yield, and the annual coupon payment. YTM is more complete than the coupon rate or current yield because it accounts for the coupon income plus any capital gain or loss from buying the bond at a discount or premium to its face value. The exact YTM has no simple closed-form solution and requires iterative calculation, so this calculator uses the widely taught approximation formula, which combines the annual coupon with the annualized difference between face value and price, divided by the average of the two. This gives a close estimate for most bonds, especially those trading near face value. When a bond trades below face value (at a discount), its YTM exceeds its coupon rate, since you also gain as it rises to face value at maturity; when it trades above face value (at a premium), YTM is below the coupon rate. The current yield, coupon divided by price, is a simpler measure that ignores the gain or loss at maturity. Investors use YTM to compare bonds of different prices, coupons, and maturities on an equal footing. This is an educational estimate; use precise tools or a financial calculator for exact YTM. Enter the bond's details to estimate its yield to maturity.
YTM ≈ (C + (F − P) / n) / ((F + P) / 2)
This uses the standard approximation for yield to maturity: the annual coupon plus the annualized gain or loss to maturity, the face value minus price divided by years, all over the average of face value and price. The current yield is the annual coupon divided by the current price.
Source:Fixed income (YTM approximation)
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter face value, current price, annual coupon rate and years to maturity.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Yield to maturity (approx.) updates instantly as you type — no button to press.
Frequently asked questions
What is yield to maturity?
Yield to maturity, or YTM, is the total annual return an investor earns if they hold a bond until it matures, receiving all coupons and the face value at the end. It accounts for coupon income plus any capital gain or loss from buying at a discount or premium, making it the most complete single measure of a bond's return.
How is YTM different from current yield?
Current yield is simply the annual coupon divided by the current price, ignoring what happens at maturity. YTM also includes the gain or loss as the price converges to face value at maturity, so it is more complete. For a bond bought at a discount, YTM is higher than current yield; at a premium, it is lower.
Why is this an approximation?
The exact YTM is the discount rate that makes the present value of all future coupons and the face value equal the bond's price, which has no simple algebraic solution and must be found iteratively. This calculator uses the standard approximation formula, which is close for most bonds, especially those priced near face value, and is ideal for quick estimates and learning.
Why does YTM exceed the coupon rate for a discount bond?
When a bond trades below its face value, you not only receive the coupons but also gain the difference between the discounted price and the higher face value paid at maturity. This extra return raises the total yield above the coupon rate. Conversely, a premium bond bought above face value has a YTM below its coupon rate.
How do investors use YTM?
YTM lets investors compare bonds with different prices, coupon rates, and maturities on a common basis, since it expresses total return as a single annual percentage. It helps in choosing between bonds, assessing whether a bond is attractively priced, and understanding the return relative to other investments. For precise figures, use a dedicated financial calculator or spreadsheet.