How to use the calculator
- Enter the bond’s face value (usually $1,000), the price you would pay, the coupon rate and the years to maturity.
- Choose how often the coupon is paid. Most US Treasury and corporate bonds pay twice a year.
- For a callable bond, open Callable bond and enter the call price and the years until it can first be called.
Bond prices are often quoted as a percentage of face value: a quote of 95 means $950 for a $1,000 bond.
What yield to maturity means
Yield to maturity (YTM) is the total yearly return you earn if you buy the bond at today’s price, hold it to maturity, receive every coupon and reinvest them at the same yield. It is the discount rate that makes the present value of all payments equal to the price:
price = Σ coupon / (1 + i)^t + face / (1 + i)^n YTM = i × payments per yearThe calculator solves for i numerically. It also shows the current yield (yearly coupon ÷ price), which ignores the gain or loss at maturity, and the effective annual yield, which compounds the periodic rate.
Example: $1,000 bond at $950, 5% coupon, 10 years
| Measure | Value |
|---|---|
| Yield to maturity | 5.662% |
| Current yield | 5.263% |
| Effective annual yield | 5.742% |
| Macaulay / modified duration | 7.93 / 7.71 years |
| Price if yields rise 1% | $880.09 |
| Price if yields fall 1% | $1,026.80 |
Bought below face value (at a discount), the bond yields more than its coupon because you also gain $50 at maturity. A bond bought above face value (at a premium) yields less than its coupon.
Duration and interest-rate risk
Bond prices move opposite to interest rates. Duration measures how much: a modified duration of 7.7 means the price falls about 7.7% if yields rise by 1 percentage point. Longer maturities and lower coupons mean higher duration and more price risk. The chart shows the full price-yield curve; its bend (convexity) is why prices rise more when yields fall than they drop when yields rise.
Yield to call and yield to worst
A callable bond can be repaid early by the issuer, usually when rates have fallen. Yield to call assumes repayment at the first call date and call price. The lower of yield to call and yield to maturity, the yield to worst, is the safer figure to compare.
Bond yields move with interest rates set by the Federal Reserve. The Fed funds rate history shows every rate change since 1982, and the inflation calculator shows how much of a bond’s fixed payments inflation takes away.
Frequently asked questions
What is yield to maturity (YTM)?
The yearly return on a bond bought at today's price and held until it matures, counting all coupons and the repayment of face value. It is the discount rate that makes the present value of the payments equal the price.
What is the difference between YTM and current yield?
Current yield is the yearly coupon divided by the price. YTM also includes the gain (or loss) between the price you pay and the face value you get back at maturity, spread over the years.
Why does the bond price fall when yields rise?
The coupons are fixed. When new bonds pay higher rates, an older bond must sell for less so that its yield matches the market.
What is duration?
A measure of a bond's sensitivity to interest rates, in years. Modified duration is the approximate percentage price change for a 1 percentage point change in yield.
How is the yield calculated for semiannual coupons?
The calculator finds the rate per six-month period and doubles it, the bond-equivalent yield that brokers and the US Treasury quote. The effective annual yield compounds the two periods.
What is yield to call?
The yield if the issuer repays a callable bond at the first call date and call price. Compare the lower of yield to call and yield to maturity, the yield to worst.
Can I put this calculator on my website?
Yes. It is free for any site. Use the embed code generator at the bottom of this page, copy the code and paste it into your page. Please keep the credit line with the two links under the calculator.
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See all free investing calculators, or add live stock quotes to your site with the free stock widgets.
Add this calculator to your website
The calculator is free to embed on any website, personal or commercial, and works on WordPress, Blogger, Wix, Squarespace, Webflow, Ghost and plain HTML. Choose the options, copy the code and paste it into your page.
Preview: this is how the calculator and the credit line will look on your page
Free for personal and commercial websites. Please keep the “by Quotelinks” credit line under the calculator visible and unchanged, and don’t modify the calculator or present it as your own. The <script> line is optional: it sizes the frame to fit the calculator; if your platform removes scripts, the calculator still works at the fixed height. Assumes all payments are made on time and coupons are reinvested at the yield. For illustration only, not financial advice.