Bond Yield Calculator: Master Fixed-Income Returns
Our Bond Yield Calculator computes YTM, current yield, YTC, and theoretical pricing. Essential for bond investors.
What is Bond Yield?
Effective return considering price, coupons, and maturity. Differs from coupon rate.
Types of Yield
| Type | Formula | Use |
|---|---|---|
| Current Yield | Annual Coupon / Price | Quick income estimate |
| YTM | IRR of cash flows | Total return if held to maturity |
| YTC | IRR to call date | For callable bonds |
Bond Pricing
PV of coupons + PV of par. Below par = discount (higher yield), above = premium.
Example: $1,000 Par, 5% Coupon, $950 Price, 10 Years, Semi-Annual
- Current Yield: 5.26%
- YTM: 5.73%
- Coupon Payment: $50/year
- Discount: $50
How YTM is Calculated
Solves: Price = Σ (Coupon / (1+YTM)^t) + Par / (1+YTM)^n
Uses Newton-Raphson approximation for IRR.
Why Bond Yields Matter
- Compare bonds
- Assess interest rate risk
- Predict returns
- Link to NPV
Pro Tips
- YTM assumes reinvestment
- Check call provisions
- Consider taxes
- Use with duration
Limitations
- No default risk
- Constant rates
- No embedded options modeled beyond call
Conclusion
Evaluate bonds accurately with our Bond Yield Calculator. Explore Finance tools.