Yield to Maturity Calculator
The Return a Bond Actually Delivers, Not the Return It Was Issued With
A bond's coupon rate is fixed forever, set the day it was issued. But the price you pay for it on the secondary market almost never equals face value, so the coupon rate alone tells you nothing about the return you'll actually earn if you buy today and hold to maturity. Yield to maturity solves for that real, single number — the internal rate of return across every coupon payment plus the final repayment of face value, given the price you're paying right now.
The Formula
Yield to maturity is the value of y that makes the right-hand side of this equation equal the bond's current price. There's no algebraic way to isolate y directly, so this calculator solves it numerically with the bisection method — repeatedly narrowing a range of candidate yields until the implied price matches the actual price to within a fraction of a cent.
Where Yield to Maturity Is Used
- Comparing bonds with different prices and coupons — a 3% coupon bond priced at a deep discount can out-yield a 6% coupon bond trading at a premium; YTM is the number that makes the comparison fair.
- Benchmarking against other assets — YTM is the figure investors actually stack up against savings account APYs, CD rates, or a target portfolio return.
- Assessing credit risk pricing — a corporate bond's YTM relative to a similar-maturity Treasury's YTM reveals the credit spread the market is demanding for that issuer's risk.
- Laddering and reinvestment planning — bond ladder strategies rely on knowing the true locked-in yield of each rung, not just its coupon.
Same Bond, Three Prices
| Current Price | Yield to Maturity |
|---|---|
| $950 (discount) | 5.6617% |
| $1,000 (par) | 5.0000% |
| $1,080 (premium) | 4.0205% |
At par, YTM always equals the coupon rate exactly. Buying below par pushes YTM above the coupon; buying above par pulls it below — the same bond, three very different real returns depending on the entry price.
How to Use This Calculator
- Enter the bond's Face Value.
- Enter the Annual Coupon Rate as a percentage.
- Enter the Years to Maturity.
- Enter the bond's Current Bond Price.
- Enter Coupon Payments per Year (default 2 for standard semiannual bonds).
- Select Calculate to get the yield to maturity as an annualized percentage.
Related Calculations
Work the calculation the other direction with the Bond Price Calculator, or see how sensitive that price is to further yield changes with the Bond Duration Calculator.