Yield to Maturity Calculator
Turn a bond's price into the total annual return you would earn by holding it all the way to maturity.
Total return, not just income
YTM blends the coupon income with the gain or loss to face value into one annual rate.
Assumes you hold and reinvest
It assumes you keep the bond to maturity and reinvest every coupon at the same yield.
What is yield to maturity?
A bond's all-in annual return
Yield to maturity (YTM) is the single annual rate that makes the present value of a bond's future cash flows — all its coupons plus the face value at the end — exactly equal to its current market price. In other words, it is the internal rate of return of buying the bond today and holding it until it matures. According to Investopedia, YTM is the most complete of the common yield measures because it captures both the coupon income and any capital gain or loss you lock in by paying less or more than face value.
YTM is the discount rate y that satisfies the bond pricing equation — there is no simple closed form, so it is solved numerically.
Price = C × [1 − (1 + y)⁻ⁿ] ÷ y + Face ÷ (1 + y)ⁿThe same equation that prices a bond from a known yield is run in reverse: the price is known and the yield is the unknown. Because the price falls smoothly as the yield rises, the calculator searches for the rate that reproduces your price, then multiplies the per-period yield by the number of periods per year to express it as an annual figure. This is exactly the internal-rate-of-return idea applied to a bond.
You buy a 1,000 bond with a 5% semi-annual coupon for 925.61, with 10 years left.
List the cash flows
Twenty coupons of 25, then 1,000 repaid at maturity.Find the rate that fits the price
Search for the per-period yield where the discounted cash flows total 925.61 — it is about 3%.Annualise it
3% per half-year × 2 ≈ 6% a year.Compare with the coupon
The 6% YTM exceeds the 5% coupon because you bought at a discount and also gain 74.39 at maturity.
Three yields describe the same bond, and the gaps between them are informative.
Coupon rate
Fixed against face value; it sets the cash interest but ignores the price you paid.
Current yield
Coupon ÷ price; it captures income against price but ignores the gain or loss at maturity.
Yield to maturity
The full picture; it folds income and the capital gain or loss into one annual return.
For a discount bond the order is coupon rate < current yield < YTM, because YTM adds the gain from buying below par. For a premium bond the order reverses. According to the U.S. Securities and Exchange Commission (SEC), yield to maturity is the standard way to compare bonds of different prices, coupons, and maturities on an equal footing, which is why it is the headline yield quoted for most bonds.
The yield to maturity is the annualized return you earn if you hold the bond to maturity and reinvest each coupon at that same yield. Read it against the current yield and coupon rate: a YTM above the coupon confirms you are buying at a discount, and below it a premium. Use YTM to compare bonds fairly — it is the one number that puts a short premium bond and a long discount bond on the same scale. Bear in mind the reinvestment assumption: if you cannot reinvest coupons at the YTM, your realised return will differ, and selling before maturity exposes you to whatever price the market sets then.
YTM is powerful but rests on assumptions worth remembering.
It assumes hold-to-maturity and reinvestment
Yield to maturity assumes you hold the bond until it matures, that every coupon is reinvested at the YTM, and that the issuer pays in full and on time — none of which is guaranteed. It uses a clean price with no accrued interest and ignores taxes, call features, and default risk, all of which change your real return. It is provided for informational purposes only and is not investment advice. Use it to compare bonds and understand return, and consult a qualified financial professional before trading.