Bond Yield Calculator
Calculate a bond's current yield and approximate yield to maturity from its face value, price, coupon rate, and years to maturity.
YTM shown is the standard approximation. Actual YTM (the exact internal rate of return) is slightly different and depends on coupon frequency.
Frequently Asked Questions
What is current yield?
The annual coupon payment divided by the bond's current price. It reflects income relative to what you pay, ignoring any gain or loss at maturity.
What is yield to maturity?
YTM is the total annualized return if you hold the bond to maturity, including coupons and any difference between price and face value. This tool shows the standard approximation.
Why are price and yield inverse?
When a bond's price falls below face value, its yield rises, and vice versa — buyers demand a higher return for paying less.
Understanding the Bond Yield Calculator
A bond's yield measures the return it provides relative to its price, which differs from the coupon rate once the bond trades above or below face value. This calculator computes current yield and yield to maturity (YTM) from a bond's price, coupon, face value, and time to maturity. It is for fixed-income investors, students, and anyone comparing bonds or evaluating a bond bought at a premium or discount. Results are educational estimates; they assume coupons are reinvested at the YTM and the issuer does not default — real outcomes can differ.
How it works
Enter the bond's face (par) value, annual coupon rate, current market price, years to maturity, and coupon frequency. Current yield is simply the annual coupon income divided by the current price — a quick snapshot that ignores any gain or loss at maturity. Yield to maturity is the total annualized return if you hold to maturity, accounting for coupons plus the difference between price and par. YTM has no closed-form solution and is found by iteration (trial and error), which the calculator handles for you. A bond priced below par has a YTM above its coupon; priced above par, YTM is below the coupon.
Worked example
A bond has a $1,000 face value, a 5% annual coupon ($50/year), 10 years to maturity, and trades at $950. Current yield is $50 / $950 = 5.26%. Because it trades at a discount, you also gain $50 at maturity, so the yield to maturity is higher — roughly 5.7%. If instead the bond traded at $1,050 (a premium), current yield would be 4.76% and YTM would fall below the 5% coupon, near 4.4%, since you lose $50 of par at maturity.
Tips & common mistakes
- Current yield ignores the capital gain or loss at maturity; YTM captures the full holding-period return, so prefer YTM for comparisons.
- Discount bonds (price below par) have YTM above the coupon; premium bonds (price above par) have YTM below the coupon.
- YTM assumes you reinvest every coupon at the same yield — rarely true in practice, so realized return can differ.
- For callable bonds, also check yield to call; issuers may redeem early when rates fall.
- Yield says nothing about credit risk — a high yield often signals higher default risk, not a better deal.
Sources & methodology
- • U.S. SEC Investor.gov — Bonds (https://www.investor.gov/introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds)
- • FINRA — Bond Yield and Return (https://www.finra.org/investors/insights/bond-yield-and-return)
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Reviewed by the TopOpenTools editorial team · Last updated June 2026. These tools provide general estimates for educational purposes only and are not financial, tax, insurance, investment, or medical advice. Verify important decisions with a qualified professional.