Yield to Maturity Calculator

Yield to maturity (YTM) is the most complete measure of a bond's return. Unlike the coupon rate, which only describes the fixed interest on par value, YTM rolls in every cash flow, all the coupons plus the gain or loss from buying above or below par, into one annualized rate. It's the return you'll actually earn if you buy at today's price and hold to maturity.

For a general look at how compounding builds a balance over time, try our compound interest calculator.

This calculator solves for the rate that makes the present value of all the bond's cash flows equal its market price, giving you a single number to compare bonds, including municipal bonds, trading at different prices and coupons.

How does this calculator work?

Enter the bond's par value, market price, annual coupon rate, and years to maturity.

Yield to maturity is the single rate that makes the present value of all coupons plus the par value equal today's price, your total return if you hold to maturity.

It captures both coupon income and any gain or loss from buying at a discount or premium, making it more complete than coupon income alone.

Worked example

A bond with $1,000 par and a 5% coupon ($50/yr) has 10 years left and trades at $900, below par.

Par value

$1,000

Coupon rate

5% ($50/yr)

Market price

$900

Years to maturity

10

Yield to maturity

6.38%

How the numbers work

YTM is the single rate that makes the bond's future cash flows worth exactly its $900 price today: ten annual $50 coupons plus the $1,000 returned at maturity. Solving for that rate gives 6.38%.

It lands above the 5% coupon because you bought the bond at a discount, paying $900 for something that repays $1,000. That $100 gain at maturity is folded into the yield, lifting it above the coupon rate alone.

Although the coupon is only 5%, the YTM is 6.38%, higher because you bought at a $100 discount that you'll recover as a gain when the bond repays $1,000 at maturity. That extra gain lifts your total return above the coupon.

The reverse holds for a premium bond bought above par: its YTM falls below the coupon rate, because the price erodes toward par by maturity.

Discount, premium, and the price-yield seesaw

A bond's price and its yield move in opposite directions. When market rates rise, existing bonds with lower coupons fall in price (trading at a discount) so their YTM rises to match; when rates fall, older higher-coupon bonds rise above par (a premium) and their YTM drops. YTM captures this automatically: it's the yield that reconciles the fixed coupons with whatever price you actually pay.

Two caveats. YTM assumes you hold to maturity and that coupons are reinvested at the same yield, a real-world simplification. And it ignores taxes and any call feature that could repay the bond early, both of which can change your realized return.