Bond Yield Calculator
Find a bond's current yield and approximate yield to maturity
📜 Bond details
The amount repaid at maturity - usually $1,000 per bond.
Last updated June 2026
Method: Current yield is annual coupon divided by price. Yield to maturity uses the standard YTM approximation formula, which adds the average annual capital gain or loss to the coupon and divides by the average of price and face value.
Included: Current yield, approximate YTM, annual coupon, total coupon income, capital gain or loss at maturity, total dollar return, and whether the bond trades at a discount, premium, or par.
Not included: Exact iterative YTM, yield to call, accrued interest, taxes, brokerage fees, semiannual compounding effects, and default or reinvestment risk. Results are estimates, not investment advice.
Bond yield calculator: everything you need to know
Suppose you buy a $1,000 corporate bond with a 5% coupon for $950 with 10 years left to maturity. It pays you $50 a year, so its current yield is $50 ÷ $950 = 5.26%. But you also pocket the extra $50 when it repays $1,000 at maturity, which lifts your yield to maturity to roughly 5.66%. That gap - the difference between the income you collect and the true return you earn - is exactly what this bond yield calculator is built to expose. Enter four numbers and it shows both yields side by side, so you can compare bonds on what they actually pay, not just on their headline coupon.
The formulas
Two simple formulas do the work. The first is current yield:
Current yield = (Annual coupon ÷ Price) × 100 where the annual coupon equals face value × coupon rate. The second is the approximate yield to maturity:
YTM ≈ (C + (F − P) ÷ n) ÷ ((F + P) ÷ 2) × 100 Here C is the annual coupon, F is the face value, P is the price you pay, and n is the number of years to maturity. The numerator adds the coupon to the average yearly capital gain or loss (F − P) ÷ n; the denominator is the average of the price and face value. It is an approximation, not the exact internal rate of return, but it lands within a few hundredths of a percent for typical bonds.
How to use this calculator
You need just four inputs, all printed on the bond's quote or trade ticket:
- Face value (par): the amount repaid at maturity, almost always $1,000 per bond.
- Coupon rate: the fixed annual interest rate stated at issue, as a percentage of face value.
- Years to maturity: how many years remain until the bond repays its face value.
- Current price: what you pay today. Bonds are often quoted as a percent of par - a quote of "95" means $950 on a $1,000 bond - so use the quick-fill buttons or type the dollar amount.
Press Calculate yield and the result shows the approximate YTM as the headline number, the current yield beside it, and a breakdown of your coupon income and capital gain or loss if you hold to maturity.
Who this calculator is for
Anyone weighing a fixed-income purchase can use it to turn a price quote into a comparable return:
- Individual investors deciding between two bonds with different coupons and prices.
- Retirees and income investors who want to know the real yield on a bond they are about to buy.
- Students and new investors learning why a bond's yield and its coupon are not the same thing.
- Anyone comparing a bond to a CD or savings account who needs an apples-to-apples annual yield.
- DIY portfolio builders sanity-checking the "yield" figure a brokerage screen reports.
Key bond terms explained
- Face value (par): the principal the issuer repays at maturity, typically $1,000.
- Coupon rate: the fixed annual interest rate, always applied to the face value, not the price.
- Coupon payment: the actual dollars paid each year (face value × coupon rate), usually split into two semiannual payments.
- Current yield: annual coupon divided by the price you pay - a snapshot of income, ignoring maturity.
- Yield to maturity (YTM): the total annualized return if you buy at the current price and hold to maturity, including the gain or loss to par.
- Discount / premium: a price below par is a discount; above par is a premium.
- Maturity: the date the bond repays its face value and stops paying coupons.
Worked example 1: a discount bond
Take a $1,000 bond with a 6% coupon ($60 a year) priced at $920 with 8 years to maturity. Current yield is $60 ÷ $920 = 6.52%. For YTM, the average yearly gain is ($1,000 − $920) ÷ 8 = $10, so the numerator is $60 + $10 = $70, and the denominator is ($1,000 + $920) ÷ 2 = $960. YTM ≈ $70 ÷ $960 = 7.29%. Because you bought at a discount, your total return beats both the coupon rate and the current yield.
Worked example 2: a premium bond
Now a $1,000 bond with a 4% coupon ($40 a year) priced at $1,080 with 5 years left. Current yield is $40 ÷ $1,080 = 3.70%. The yearly loss to par is ($1,000 − $1,080) ÷ 5 = −$16, so the numerator is $40 − $16 = $24, over an average price of $1,040. YTM ≈ $24 ÷ $1,040 = 2.31%. Paying a premium drags your real return below the coupon, which is why a fat coupon alone never tells the full story.
Worked example 3: a bond at par
If that same 4% bond trades at exactly $1,000, there is no gain or loss to maturity. Current yield is $40 ÷ $1,000 = 4.00%, and YTM is also 4.00%. At par, the coupon rate, current yield, and yield to maturity all converge - the only case where the three line up.
What changes the result the most
Adjust the inputs and you will see a few levers dominate:
- Price relative to par: the single biggest driver of the YTM-versus-coupon gap. The further below par, the higher the YTM.
- Years to maturity: a discount or premium spread over fewer years has a bigger annual impact, so a short bond at a discount has a notably higher YTM.
- Coupon rate: sets the income floor; higher coupons lift both yields.
- Face value: scales the dollar figures but not the percentage yields - $1,000 is standard.
Tips for comparing bonds
- Compare on YTM, not coupon. Two bonds with very different coupons can have the same YTM once price is accounted for.
- Match maturities. A higher yield on a longer bond usually comes with more interest-rate risk, so compare similar terms.
- Mind credit quality. A higher YTM often signals higher default risk; check the issuer's credit rating before chasing yield.
- Adjust for taxes. A lower-yielding Treasury or municipal bond can beat a corporate bond after tax - convert to an after-tax basis before deciding.
- Watch call features. If a premium bond is callable, also estimate yield to call and use the lower figure.
Limitations and assumptions
This is a planning estimate, not a precise pricing engine. Keep these assumptions in mind:
- The YTM is an approximation, not the exact internal rate of return solved iteratively.
- It works with the annual coupon and does not model semiannual compounding, which shifts the precise effective yield slightly.
- It assumes you hold to maturity and the issuer makes every payment - it does not price in default or early-call risk.
- It ignores accrued interest, brokerage fees, and bid-ask spreads paid at purchase.
- It shows pre-tax yields; the after-tax result depends on the bond type and your tax bracket.
- It does not assume any particular reinvestment rate for the coupons you receive.
How it compares to related options
This page answers "what does this specific bond actually yield?" If your question is different, a sister tool fits better:
- To compare a bond's yield against a bank product, use the Compound Interest Calculator or a CD yield (APY) calculator.
- To project a diversified portfolio with regular contributions, use the Investment Calculator.
- To measure the percentage return on any one-off investment, use the ROI Calculator.
- To plan long-term retirement savings, use the Retirement, 401(k), or Roth IRA calculators.
⚠️ Common mistakes & edge cases
Confusing coupon rate with yield
The coupon is fixed on the face value; your yield depends on what you pay. A 5% coupon bond bought at $950 yields more than 5%, and the same bond at $1,050 yields less. Compare bonds on yield, never on coupon alone.
Using current yield as the total return
Current yield ignores the gain or loss at maturity. A discount bond's true return is higher than its current yield, and a premium bond's is lower. Always check YTM for the full picture.
Treating the approximate YTM as exact
The formula here is an approximation. For most bonds it is within a few hundredths of a percent of the exact figure, but for a long premium bond it can drift slightly - confirm with a financial calculator before a large purchase.
Ignoring taxes, fees, and call risk
A headline yield is pre-tax and pre-fee. Treasuries and municipals are taxed differently from corporates, commissions cut into returns, and a callable bond may be redeemed early. Adjust before comparing yields across bond types.
❓ Frequently asked questions
What is the difference between current yield and yield to maturity?
Current yield only compares the annual coupon income to the price you pay, so it ignores any gain or loss when the bond matures. Yield to maturity (YTM) is the more complete measure: it also folds in the difference between the price and the face value you receive at maturity, spread over the remaining years. If you buy a bond below par, YTM is higher than current yield; if you buy above par, YTM is lower.
How is current yield calculated?
Current yield = annual coupon payment / current price x 100. The annual coupon payment is the face value times the coupon rate. For example, a $1,000 bond with a 5% coupon pays $50 a year; if it trades for $950, the current yield is $50 / $950 = 5.26%.
How is the approximate yield to maturity calculated?
This calculator uses the standard approximation: YTM ≈ (C + (F − P) / n) / ((F + P) / 2) x 100, where C is the annual coupon, F is the face value, P is the price, and n is years to maturity. It adds the average yearly capital gain or loss to the coupon, then divides by the average of the price and face value. It is close to the exact YTM and far easier to compute by hand.
Is the YTM here exact?
No - it is a well-known approximation, not the exact internal rate of return. The exact YTM is the discount rate that makes the present value of all coupons plus the final face value equal the price, which has no simple closed-form solution and must be solved iteratively. For most bonds the approximation is within a few hundredths of a percent of the exact figure, which is plenty accurate for comparing bonds.
What does it mean for a bond to trade at a discount or premium?
A bond trades at a discount when its price is below face value (par), and at a premium when its price is above par. Bonds fall to a discount when market interest rates rise above the coupon, and rise to a premium when rates fall below the coupon. At a discount your YTM exceeds the coupon rate; at a premium it is lower; at par they are roughly equal.
Why does a bond's price move opposite to interest rates?
A bond's coupon is fixed. When new bonds are issued at higher rates, an older lower-coupon bond is worth less, so its price falls until its yield matches the market - and vice versa when rates drop. That inverse relationship is why bond prices fall when rates rise, and the effect is larger for bonds with more years to maturity.
What is the coupon rate versus the yield?
The coupon rate is fixed at issue and is always calculated on the face value, so a 5% coupon on a $1,000 bond always pays $50 a year. The yield reflects what you actually earn given the price you pay. Only when you buy a bond exactly at par do the coupon rate, current yield, and YTM all line up.
Does this calculator account for taxes or fees?
No. It shows pre-tax, pre-fee yields. Interest from corporate bonds is generally taxable; U.S. Treasury interest is exempt from state and local tax; and many municipal bonds are exempt from federal tax. Brokerage commissions or markups also reduce your real return. Compare bonds on a like-for-like basis and factor taxes in separately.
How often are bond coupons actually paid?
Most U.S. bonds pay coupons semiannually (twice a year), even though the coupon rate is quoted annually. This calculator works with the annual coupon for a clear, comparable yield. Semiannual compounding makes the precise effective yield slightly different, but the approximation remains a reliable basis for comparison.
What is yield to call, and is it shown here?
Yield to call (YTC) is the return if the issuer redeems a callable bond early at the first call date instead of letting it run to maturity. This calculator computes yield to maturity, which assumes the bond is held to its stated maturity. If a bond is callable and trading at a premium, prudent investors also check the lower of YTM and YTC, sometimes called yield to worst.
💡 Good to know
Bond prices and yields move in opposite directions
When market interest rates rise, existing bonds with lower coupons fall in price so their yields catch up - and the reverse happens when rates fall. That is why a bond bought at a discount carries a higher yield to maturity than its coupon rate.
Yield is quoted before tax
U.S. Treasury interest is exempt from state and local tax, many municipal bonds are exempt from federal tax, and corporate bond interest is fully taxable. A lower headline yield can win after tax, so compare bonds on an after-tax basis.
Higher yield usually means higher risk
If one bond yields far more than similar bonds, it is often because the market sees more default risk. Check the issuer's credit rating and maturity before chasing the bigger number - extra yield is compensation for extra risk.
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