Yield to Maturity Calculator
Enter a bond's face value, coupon rate, years to maturity, and the price you'd pay today to calculate its yield to maturity — the total annualized return you'd earn holding it to the end — and see how that compares to the coupon rate and current yield.
Yield to Maturity Calculator
Enter a bond's face value, coupon rate, years to maturity, and the price you'd pay today. Assumes semi-annual coupons and that you hold the bond until it matures.
Amount repaid at maturity — usually $1,000 per bond.
Pays $25.00 every six months ($50.00/yr).
What you pay today — above par is a premium, below par a discount.
How long until the issuer repays the face value.
Yield to Maturity
5.66%
held to maturity in 10 years
Current Yield
5.26%
$50.00 ÷ $950.00
Coupon Rate
5.00%
fixed on $1,000.00 par
You're buying at a discount ($950.00 < $1,000.00 par), so the 5.66% YTM sits above both the 5.26% current yield and the 5.00% coupon — you also collect the climb back to par at maturity.
What Yield to Maturity Measures
Yield to maturity (YTM) is the single annualized rate of return you'd earn if you buy a bond at today's price and hold it until the issuer repays the face value. Unlike the coupon rate, it captures the full picture: every interest payment and the gain or loss between what you pay now and the par value you collect at the end.
Formally, YTM is the discount rate that makes the present value of all a bond's future cash flows equal to its current price:
Price = Σ [ Coupon ÷ (1 + YTM)ᵗ ] + Face ÷ (1 + YTM)ⁿ
Because YTM appears inside every term, you can't solve for it with simple algebra — you have to search for the rate that balances the equation, which is exactly what the calculator does above. A common shortcut for a rough estimate is the approximation:
YTM ≈ [ C + (Face − Price) ÷ n ] ÷ [ (Face + Price) ÷ 2 ]
where C is the annual coupon, n is years to maturity, and the denominator is the average of face and price. It gets you in the ballpark but ignores compounding, so it drifts from the exact figure on longer bonds. This is the same present-value machinery behind the compound interest formula, run in reverse — instead of growing a lump sum forward, YTM discounts future payments back to today.
YTM vs. Coupon Rate: Reading the Result
The relationship between a bond's YTM and its coupon rate tells you at a glance whether you're buying at a discount, a premium, or par:
- YTM > coupon rate— you're buying at a discount (below par). Your return beats the coupon because you also pocket the price's climb up to face value at maturity.
- YTM < coupon rate— you're paying a premium (above par). The price drifts down toward par by maturity, trimming your return below the headline coupon.
- YTM = coupon rate— you're buying at par. With no price gain or loss to capture, your return is simply the coupon.
This is why two bonds with identical 5% coupons can offer very different returns: the one trading at 95 cents on the dollar yields more than the one trading at 105, even though they pay the same dollars in coupons. YTM is the number that lets you compare them on equal footing.
YTM vs. Current Yield
Current yield is the simpler cousin of YTM: it's just the annual coupon divided by the price you paid.
Current yield = Annual coupon ÷ Current price
It measures the income a bond throws off today but stops there — it ignores the $50 (or whatever) you also collect when a discount bond matures at par, or the premium you slowly give back on a bond bought above par. YTM folds that end-of-life gain or loss in. So on a discount bond, YTM lands above the current yield; on a premium bond, it sits below. Both are useful: current yield answers “how much income now?” while YTM answers “what's my total return if I hold to the end?”
One caveat worth remembering: YTM assumes you reinvest every coupon at the same YTM rate. If rates fall while you hold the bond, your realized return can come in a touch below the quoted figure. For fixed-income decisions more broadly — where safe money should actually sit — weigh bonds against the alternatives in HYSA vs CD vs index fund.
Related Tools & Articles
Bond Yield Calculator
Current yield, YTM, and yield to call with a coupon-frequency option
Treasury Bond Calculator
YTM for a Treasury, plus the taxable yield a CD would need to match it
Compound Interest Formula
The present-value math that yield to maturity solves in reverse
HYSA vs CD vs Index Fund
Where to park cash — yield, access, and risk compared
Frequently Asked Questions
What is a good yield to maturity?
There's no single number — a good YTM is one that beats what you could earn on a comparably safe investment for the same length of time. Benchmark it against a Treasury of similar maturity: if a 10-year Treasury yields 4.3%, a 10-year corporate bond yielding 4.4% is barely paying you for its extra default risk, while one yielding 6% is compensating you more. A higher YTM almost always means more risk, not a free lunch, so weigh it against the issuer's credit quality rather than chasing the biggest number.
How do you calculate yield to maturity?
YTM is the discount rate that makes the present value of a bond's future cash flows — every coupon plus the face value at maturity — equal to its current price. There's no clean algebraic formula to isolate it, so calculators (including this one) solve for it iteratively, trying rates until the discounted cash flows match the price. By hand you'd use the approximation YTM ≈ [annual coupon + (face − price) ÷ years] ÷ [(face + price) ÷ 2], which gets you close but ignores the compounding that the exact solve captures.
What is the difference between yield to maturity and coupon rate?
The coupon rate is fixed when the bond is issued and sets the dollar interest you receive each year — it never changes. YTM is your total annualized return if you buy at today's price and hold to maturity, folding in both the coupons and any gain or loss between your purchase price and the face value you're repaid. They're equal only when you buy exactly at par. Buy below par and YTM exceeds the coupon; buy above par and it falls short.
What is the difference between yield to maturity and current yield?
Current yield is just the annual coupon divided by the price you paid — a snapshot of the income the bond throws off right now. It ignores what happens at maturity. YTM goes further: it also accounts for the difference between your purchase price and the face value repaid at the end, spread across the years you hold the bond. On a discount bond, YTM is higher than current yield because you also pocket the climb back to par; on a premium bond, YTM is lower.
Does yield to maturity assume you reinvest the coupons?
Yes — the standard YTM calculation assumes every coupon is reinvested at the same YTM rate until maturity. That's a simplifying assumption, not a guarantee: if rates fall, you may have to reinvest coupons at lower yields, so your realized return can come in below the quoted YTM. This reinvestment assumption is why YTM is best read as an estimate of return under stable-rate conditions rather than a locked-in promise.
What happens to yield to maturity when interest rates rise?
For a bond you already own, rising market rates push its price down, which raises the YTM a new buyer would earn — but your own locked-in return doesn't improve, you just hold a bond now worth less than you paid. When shopping for bonds, higher prevailing rates mean higher available YTMs. This inverse relationship between price and yield is the core of bond-market math: prices and yields always move in opposite directions.