Yield to Call Calculator
Calculate potential returns on callable bonds and analyze call risk for informed investment decisions
Calculate Yield to Call
Annual coupon payment received from the bond
Price at which the bond can be called by issuer
Current trading price of the bond
Time until the bond can be called (in years)
Yield to Call Results
Example Calculation
Corporate Bond Example
Annual Interest: $50
Call Price: $1,050
Market Price: $980
Years to Call: 5 years
Calculation
Capital Gain per Year = ($1,050 - $980) / 5 = $14
Total Annual Return = $50 + $14 = $64
Average Investment = ($1,050 + $980) / 2 = $1,015
YTC = ($64 / $1,015) × 100 = 6.31%
Callable Bond Features
Call Protection
Period when bond cannot be called
Call Premium
Extra amount paid above par value
Call Schedule
Specific dates when calling is allowed
Call Risk
Risk of early redemption by issuer
Investment Tips
Compare YTC with YTM to assess call risk
Consider call protection period before investing
Higher yields often compensate for call risk
Avoid paying premium above call price
Monitor interest rate trends for call likelihood
Understanding Yield to Call
What is Yield to Call?
Yield to Call (YTC) is the return an investor can expect to receive if a callable bond is held until its call date, rather than its maturity date. It accounts for the annual interest payments and any capital gain or loss if the bond is called at the specified call price.
Why Use YTC?
- •Assess potential returns under call scenarios
- •Compare with yield to maturity (YTM)
- •Evaluate call risk in investment decisions
- •Determine fair value for callable bonds
YTC Formula
YTC = (Annual Interest + (Call Price - Market Price) / Years to Call) / ((Call Price + Market Price) / 2) × 100
- Annual Interest: Yearly coupon payment
- Call Price: Price at which bond can be called
- Market Price: Current trading price
- Years to Call: Time until call date
Note: YTC assumes the bond will be called at the earliest call date. For bonds with multiple call dates, calculate YTC for each date to determine yield to worst (YTW).
When Bonds Get Called
Favorable Conditions for Issuers
- • Interest rates have declined significantly
- • Bond trading above call price
- • Opportunity to refinance at lower rates
- • Improved credit rating allowing cheaper debt
Risks for Investors
- • Reinvestment risk at lower rates
- • Loss of high-yielding investment
- • Potential capital loss if paid premium
- • Shortened investment timeline