Yield to Maturity Calculator
Calculate the yield to maturity (YTM) and analyze bond investment returns
Bond Details
Current market price of the bond
Principal amount repaid at maturity
Annual interest rate paid on face value
How often coupon payments are made
Number of years until bond matures
Yield to Maturity Analysis
YTM Analysis
Example Calculation
Corporate Bond Example
Bond Price: $980
Face Value: $1,000
Annual Coupon Rate: 5%
Coupon Frequency: Annual
Years to Maturity: 10 years
YTM Calculation
Annual Coupon: $1,000 × 5% = $50
Using iterative calculation method
YTM ≈ 5.26%
Key YTM Factors
Interest Rates
Rising rates decrease bond prices
Inverse relationship with YTM
Credit Quality
Higher risk = higher yield
Risk premium for default risk
Time to Maturity
Longer maturity = more volatility
Duration risk affects pricing
Bond Investment Tips
YTM assumes all coupons are reinvested at the same rate
Higher YTM indicates higher risk or market discount
Compare YTM with current interest rates
Consider tax implications of bond income
Understanding Yield to Maturity (YTM)
What is Yield to Maturity?
Yield to Maturity (YTM) is the total return anticipated on a bond if held until it matures. It represents the internal rate of return (IRR) of all cash flows from the bond, including coupon payments and the repayment of principal.
Key Assumptions
- •Bond is held until maturity
- •All coupon payments are reinvested at YTM rate
- •No default occurs
- •Interest rates remain constant
YTM vs Other Yield Measures
Current Yield
Annual coupon payment ÷ current bond price
Yield to Call (YTC)
Return if bond is called before maturity
Nominal Yield
Coupon rate stated on the bond
Note: YTM calculation requires iterative methods due to the complex mathematical relationship between bond price and yield.