Yield to Maturity Calculator

YTM is the internal rate of return on a bond if you buy it at today's market price, collect every coupon on schedule, hold it to maturity, and reinvest each coupon at the same YTM until redemption. It is the discount rate that makes the present value of future coupons and face value equal the purchase price. Selling early or reinvesting at another rate changes the realized return.

The closed-form approximation, (C + (F - P) / n) / ((F + P) / 2), gives you a mental-math estimate in one step: annual coupon plus straight-line gain or loss to maturity, divided by the average of face and price. It is fast and intuitive but can be materially off on long-dated bonds or deep discounts. The numerical answer uses Newton-Raphson with a bisection fallback to solve the bond-pricing equation, then displays the result to four decimal places. Use the approximation as a sanity check and the numerical result for comparison.

If you pay $900 for a bond that redeems at $1,000 in ten years, you collect the regular coupon every period plus a $100 capital gain at maturity. YTM rolls both pieces into one annualized return, which pulls 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 capital loss at maturity, so YTM lands below the coupon rate. At par (price equals face), YTM equals the coupon rate exactly because there is no capital gain or loss to amortize.

YTM is a contract-style return only if you actually reinvest every coupon at YTM until the bond matures. In practice, the rate you can earn on reinvested coupons depends on the prevailing interest rate environment when each coupon arrives. If rates have fallen, you reinvest at lower yields and your realized return ends up below the original YTM. If rates have risen, the opposite happens. Reinvestment risk is largest for long-maturity, high-coupon bonds (more coupons, more reinvestment decisions) and smallest for zero-coupon bonds (no coupons to reinvest, so realized yield equals YTM if held to maturity).

Many corporate and municipal bonds are callable: the issuer can redeem them early at a stated call price. Yield to Call uses the call date and call price instead of the maturity date and redemption value, and investors often compare it with YTM when evaluating yield to worst. This calculator does not collect a separate call price or accrued interest, so it cannot calculate YTC reliably. Use a dedicated Yield to Call calculator for a callable bond.