Bond Yield to Maturity Calculator

You can use this Bond Yield to Maturity Calculator to calculate the bond yield to maturity based on the current bond price, the face value of the bond, the number of years to maturity, and the coupon rate. It also calculates the current yield of a bond.

Fill in the form below and click the "Calculate" button to see the results.

Reference

The calculator uses the following formula to calculate the current yield of a bond:

CY = C / P * 100, or CY = (B * CR / 100) / P

Where:

CY is the current yield,

C is the periodic coupon payment,

P is the price of a bond,

B is the par value or face value of a bond,

CR is the coupon rate.

Example 1: What is the current yield of a bond with the following characteristics: an annual coupon rate of 7%, five years until maturity, and a price of $800?

Solution: The yearly coupon payment is $1000 × 7% = $70, using the formula above, we get:

CY = 70 / 800 * 100

CY = 8.75%, The Current Yield is 8.75%

The calculator uses the following formula to calculate the yield to maturity:

P = C×(1 + r) ^-1 + C×(1 + r) ^-2 + . . . + C×(1 + r) ^-Y + B×(1 + r) ^-Y

Where:

P is the price of a bond,

C is the periodic coupon payment,

r is the yield to maturity (YTM) of a bond,

B is the par value or face value of a bond,

Y is the number of years to maturity.

Example 2: Suppose a bond is selling for $980, and has an annual coupon rate of 6%. It matures in five years, and the face value is $1000. What is the Yield to Maturity?

Solution: The yearly coupon payment is $1000 × 6% = $60, the equation takes the following form:

980 = 60×(1 + r) ^-1 + 60×(1 + r) ^-2 + 60×(1 + r) ^-3 + 60×(1 + r) ^-4 + 60×(1 + r) ^-5 + 1000×(1 + r) ^-5

r = 6.48%, The Yield to Maturity (YTM) is 6.48%

You may also be interested in our free Tax-Equivalent Yield Calculator or T-Bill Calculator