Bond Yield Calculator
Bonds can be confusing because several different 'yields' describe different things, and using the wrong one can lead you to overpay for a bond or misunderstand the income it produces. Current yield is the simplest measure: the annual coupon payment divided by the price you actually pay for the bond. It tells you the income you'll receive each year relative to your investment. Yield to maturity (YTM) is the more complete measure: it estimates the total annualized return you'll earn if you hold the bond until it matures, accounting for both the coupon payments and any gain or loss from buying the bond at a discount or a premium to its face value. A bond bought below face value (at a discount) has a YTM higher than its coupon rate because you gain the difference at maturity; a bond bought above face value (at a premium) has a lower YTM. This calculator estimates both current yield and approximate YTM so you can compare bonds on an apples-to-apples basis and judge whether a bond is fairly priced. It is especially useful when comparing bonds with different coupons, maturities, and prices, where the headline coupon rate alone is misleading. The YTM estimate uses the standard bond approximation formula, which is close to the exact figure for most purposes; for precise figures that include reinvestment assumptions, use a full bond pricing model. Note that the calculator ignores accrued interest between coupon dates, so treat the result as a useful comparison tool rather than a settlement quote. For most income investors, current yield answers 'how much income does this bond throw off each year?' while YTM answers 'what is my total return if I hold to the end?' — and both belong in any fixed-income decision.
Bond Yield Calculator
Calculate a bond's current yield and approximate yield to maturity.
Current yield
5.3%
Annual income ÷ price
Yield to maturity (est.)
5.6%
Total return at maturity
$550
Current yield measures the income you receive each year relative to the price you pay. Yield to maturity (YTM) approximates the total annualized return if you hold the bond to its maturity date.
How to Use This Calculator
- 1Enter the bond's face (par) value, usually $1,000.
- 2Enter the annual coupon payment the bond pays.
- 3Enter the current market price of the bond.
- 4Enter the years remaining until maturity.
- 5Read the current yield and approximate yield to maturity.
Why It Helps
- ✓Compares income (current yield) with total return (YTM).
- ✓Helps you decide if a bond is fairly priced.
- ✓Useful for comparing bonds with different coupons and maturities.
- ✓Quick estimate without a financial calculator.
About This Calculator
Bonds can be confusing because several different 'yields' describe different things, and using the wrong one can lead you to overpay for a bond or misunderstand the income it produces. Current yield is the simplest measure: the annual coupon payment divided by the price you actually pay for the bond. It tells you the income you'll receive each year relative to your investment. Yield to maturity (YTM) is the more complete measure: it estimates the total annualized return you'll earn if you hold the bond until it matures, accounting for both the coupon payments and any gain or loss from buying the bond at a discount or a premium to its face value. A bond bought below face value (at a discount) has a YTM higher than its coupon rate because you gain the difference at maturity; a bond bought above face value (at a premium) has a lower YTM. This calculator estimates both current yield and approximate YTM so you can compare bonds on an apples-to-apples basis and judge whether a bond is fairly priced. It is especially useful when comparing bonds with different coupons, maturities, and prices, where the headline coupon rate alone is misleading. The YTM estimate uses the standard bond approximation formula, which is close to the exact figure for most purposes; for precise figures that include reinvestment assumptions, use a full bond pricing model. Note that the calculator ignores accrued interest between coupon dates, so treat the result as a useful comparison tool rather than a settlement quote. For most income investors, current yield answers 'how much income does this bond throw off each year?' while YTM answers 'what is my total return if I hold to the end?' — and both belong in any fixed-income decision.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial, tax, or investment advice. Results depend on assumptions that may not reflect your actual situation.
Frequently Asked Questions
What is the difference between current yield and YTM?
Current yield measures annual income relative to price. YTM estimates the total annualized return if you hold to maturity, including price gains or losses.
Why is my YTM higher than the coupon rate?
When a bond trades below its face value (at a discount), YTM exceeds the coupon rate because you gain the difference at maturity. The opposite is true for premium bonds.
Is the YTM estimate exact?
It is a close approximation using the standard bond formula. For exact figures including reinvestment assumptions, use a full bond pricing model.
Does this include accrued interest?
No. This is a simplified estimate that ignores accrued interest between coupon dates.
What is a good bond yield?
It depends on risk. U.S. Treasuries yield less than corporate bonds. Compare yields within the same credit quality and maturity.
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Written by
James MitchellSenior Financial Analyst & Personal Finance Expert
Certified Financial Planner (CFP) • MBA in Finance, University of Chicago Booth School of Business