Calculate current yield and yield to maturity for any bond. Enter coupon rate, face value, market price, and maturity to see all yield metrics.
Bond yield measures the return you earn from a bond investment. The simplest measure — current yield — divides the annual coupon payment by the current market price. But for a more complete picture, yield to maturity (YTM) accounts for the difference between the price you pay and the face value at maturity, plus all coupon payments in between.
This Bond Yield Calculator computes both current yield and approximate YTM, along with annual income, total return over the holding period, and whether the bond trades at a premium or discount to par. It supports both annual and semi-annual coupon frequencies.
Understanding bond yield is essential for fixed income investors, retirees building income portfolios, and anyone comparing bonds, CDs, and other interest-bearing investments. Comparing yields across different instruments clarifies which actually delivers the best return after accounting for purchase price, coupon frequency, and time to maturity. This makes comparing alternatives straightforward.
A bond with a 5% coupon rate is not necessarily yielding 5%. If you buy it above par (premium), your effective yield is lower; if below par (discount), your yield is higher. This calculator shows your true yield based on the actual purchase price, not just the stated coupon. This full-picture metric matters most when comparing bonds with different coupon rates and maturities.
Current Yield = Annual Coupon / Market Price x 100. Approximate YTM = [C + (F-P)/n] / [(F+P)/2] x 100, where C = annual coupon, F = face value, P = price, n = years to maturity.
Result: Current Yield: 5.26% | Approximate YTM: 5.66%
A $1,000 bond with a 5% coupon purchased at $950 has a current yield of $50/$950 = 5.26%. The approximate YTM includes the $50 capital gain over 10 years ($5/year), giving [50+5]/[(1000+950)/2] = 55/975 = 5.64%. The exact YTM (iterative) is approximately 5.66%.
The yield curve plots yields across different maturities. Normally, longer maturities offer higher yields (compensation for time risk). An inverted yield curve — where short-term yields exceed long-term — has historically been a recession indicator of significant importance to economists and investors.
The spread between a corporate bond yield and a Treasury bond of the same maturity reflects credit risk. High-quality corporates typically yield 0.5-1.5% above Treasuries, while high-yield (junk) bonds may yield 3-6% more. Widening spreads signal increasing credit risk in the market.
TIPS (Treasury Inflation-Protected Securities) pay a real yield — adjusted for inflation. Comparing the 10-year Treasury nominal yield to the 10-year TIPS yield gives you the market implied inflation rate (breakeven inflation). This is a key indicator for inflation expectations.
Current yield only considers the coupon income relative to price. YTM considers all future cash flows including coupon payments and the return of face value at maturity, making it a total return measure. YTM is the more comprehensive metric.
Bond prices and yields are mathematically inverse. When market rates rise, existing bonds with lower coupons become less attractive, so their prices fall until their yield matches the new market rate. This is the fundamental pricing mechanism of the bond market.
A premium bond trades above its face value (e.g., $1,050 for a $1,000 bond) because its coupon rate is higher than current market rates. A discount bond trades below face value because its coupon is lower than current market rates.
Not necessarily. Higher yields usually indicate higher risk — the bond issuer may have lower credit quality, longer maturity, or less liquidity. Always consider credit ratings and maturity alongside yield when comparing bonds.
The Fed sets short-term rates, which directly affect short-term bond yields. Long-term yields are influenced by market expectations of future rates, inflation, and economic growth. When the Fed raises rates, most bond yields rise and prices fall.
For municipal bonds (tax-exempt), the tax-equivalent yield equals the muni yield divided by (1 - marginal tax rate). A 3.5% muni yield for a taxpayer in the 32% bracket is equivalent to 5.15% from a taxable bond.