What is yield to maturity (YTM)?

YTM is the total annualized return an investor earns if the bond is purchased at the current price and held to maturity, assuming all coupon payments are reinvested at the same rate. It is the discount rate that makes the present value of all future cash flows equal the bond's market price.

What is current yield and how does it differ from YTM?

Current yield equals the annual coupon payment divided by the bond's current market price. It measures only the income return and ignores any capital gain or loss at maturity. YTM captures the full return, including price appreciation or discount accretion, making it a more complete measure.

Why is YTM higher than the coupon rate for a discount bond?

When a bond trades below its face value, you receive the full face value at maturity — a capital gain on top of the coupon income. That extra gain is factored into YTM, pushing it above the coupon rate. The opposite applies to premium bonds.

What does semi-annual frequency mean?

Most US Treasury and corporate bonds pay coupons every six months. In semi-annual mode the annual coupon is split into two equal payments per year, and the YTM is solved on a per-period basis then annualized using the bond-equivalent yield (BEY) convention by multiplying the periodic yield by 2.

How accurate is this YTM calculation?

This tool uses bisection iteration with a precision of 0.000001 to find the exact YTM, matching the output of financial calculators (HP 12C, BA II Plus) and spreadsheet functions (YIELD, IRR) to at least four decimal places.

Can I calculate the yield for a zero-coupon bond?

Yes. Set the coupon rate to 0. The YTM will be based entirely on the price discount relative to face value over the remaining term, and the current yield will be 0% since there are no coupon payments.

Bond Yield Calculator

Name: Bond Yield Calculator
Availability: InStock
Author: Nham Vu

Enter a bond's face value, coupon rate, market price, and maturity to instantly calculate its yield to maturity and current yield.

Bond Parameters

Face Value ($)

Annual Coupon Rate (%)

Market Price ($)

Years to Maturity

Coupon Frequency

Semi-Annual Annual

Enter bond parameters and click Calculate Yield

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Summary

Enter a bond's face value, coupon rate, market price, and maturity to instantly calculate its yield to maturity and current yield.

How it works

Enter the bond face value (par value), typically $1,000.
Enter the annual coupon rate as a percentage (e.g. 5 for 5%).
Enter the current market price of the bond.
Set the years to maturity and choose annual or semi-annual coupon frequency.
Click "Calculate" — YTM is solved via bisection iteration and current yield is computed directly.
Review the result panel showing YTM, current yield, coupon payment, and bond status.

Use cases

Comparing yields across bonds with different prices and maturities.
Verifying a broker-quoted YTM against an independent calculation.
Deciding whether a premium or discount bond offers better value.
Screening bonds to build a fixed-income ladder.
Teaching the relationship between bond price and yield.
Quick yield check before executing a trade.

Frequently Asked Questions

Last updated: 2026-07-01 · Reviewed by Nham Vu