Bond Yield Calculator
Calculate a bond's current yield and an approximate yield to maturity from its face value, coupon rate, current price, and years to maturity.
$
%
$
Yr
Current Yield
5.26%
Approx. Yield to Maturity
5.64%
Annual Coupon Payment
$50.00
How Bond Yield Is Calculated
Enter a bond's face value, coupon rate, current market price, and years remaining to maturity to see its current yield and an approximate yield to maturity (YTM). Current yield only looks at the income relative to what you'd pay today, while YTM approximates the total return if the bond is held until it matures, including the gain or loss from buying below or above face value.
Approx. YTM = [Coupon + (Face Value − Price) ÷ Years] ÷ [(Face Value + Price) ÷ 2]
Example
A bond with a $1,000 face value, 5% coupon rate, trading at $950, with 10 years to maturity pays a $50 annual coupon. Current yield = 50 ÷ 950 = 5.26%. The approximate YTM, which also accounts for the $50 capital gain earned by maturity, comes out to roughly 5.64%.
Common Use Cases
- Comparing income return across bonds trading at different prices.
- Estimating total expected return if a bond is held to maturity.
- Deciding whether a discounted or premium bond offers better value.
- Screening fixed-income investments before deeper due diligence.
FAQs
Why is current yield different from the coupon rate?
The coupon rate is fixed against the bond's face value, but current yield is based on the price you actually pay. If a bond trades below face value, its current yield is higher than the coupon rate, and vice versa for a bond trading above face value.
Is the YTM approximation exact?
No — it's a widely used simplified formula. The precise YTM requires solving for the discount rate that equates the bond's price to the present value of all future cash flows, which normally needs iterative calculation or financial software.
What does it mean if a bond trades at a discount?
A bond trading below its face value (a discount) will return the face value at maturity, adding a capital gain on top of coupon payments — which is why its YTM is higher than its current yield.