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Yield to Maturity (YTM)
Current Yield
About Bond Yield Calculator
What is Bond Yield?
Bond yield measures the return an investor realizes on a bond. The two main metrics are Current Yield (annual interest divided by current price) and Yield to Maturity (YTM, which accounts for interest, price paid vs. face value, and time value of money). YTM is the most comprehensive measure of a bond's return.
Formula
Yield to Maturity (YTM) is solved by finding r in the following equation (usually via iteration):
P = (C / r) * [1 - (1 + r)^(-n)] + F / (1 + r)^n
Variables
- P = Current Market Price
- F = Face Value
- C = Coupon Payment per Period
- r = Yield to Maturity per Period
- n = Total Number of Payments
How to Use Bond Yield Calculator
- Enter bond face value
- Enter annual coupon rate
- Enter current market price
- Click calculate to get current yield
Key Concepts
- Current yield ignores capital gains/losses at maturity
- Reflects only interest return at current price
- Suitable for short-term analysis
