Bond Yield Calculator

YTM is the annualized return implied by a bond's price if you hold it to maturity and receive every scheduled payment. It is the discount rate that makes the present value of the coupons and face-value redemption equal the price you paid. Realizing that quoted return also assumes you can reinvest each coupon at the same yield. This calculator follows the standard nominal bond convention: it multiplies the per-period yield by the number of coupon periods per year. A 2.5% semiannual yield is therefore quoted as 5% YTM.

Current yield divides the annual coupon by the price you paid and stops there. It ignores any capital gain or loss between today's price and the face value you receive at maturity. YTM folds that gain or loss in, which is why a discount bond's YTM exceeds its current yield and a premium bond's YTM falls below it.

If you pay $900 for a bond that redeems at $1,000, you collect the regular coupon every period plus a $100 capital gain at maturity. YTM blends both pieces into one annualized return, pulling it above the stated coupon rate. The reverse applies to a premium bond: paying $1,050 for a $1,000 par bond means a $50 loss at maturity, so YTM lands below the coupon rate.

Most US corporate and Treasury bonds pay semiannually, so that is the standard choice. Use annual for many European bonds, quarterly for some floating-rate notes, and monthly for certain mortgage-backed or retail-targeted bonds. The frequency affects the coupon payment size and the number of discounting periods. Under the nominal bond convention used here, the periodic yield is multiplied by the coupon frequency to quote annual YTM.

Macaulay duration is the present-value-weighted average time until you receive all of a bond's cash flows, expressed in years. Modified duration divides that figure by (1 + the per-period yield) and estimates the percentage price change for a one-percentage-point shift in yield. A modified duration of 7 means the bond's price falls about 7% if yields rise by 1 percentage point. That is an approximation that works best for small yield moves.