Yield to Maturity Calculator
This calculator works out the yield to maturity (YTM) of a bond, the annualised return you can expect if you buy it today and hold it through to maturity. YTM captures more than the coupon rate alone, because it also allows for the gain or loss you make when the bond's market price differs from its face value, giving a fuller picture of your real return. Enter the bond's current market price, its remaining life in years, the interest coupon rate it pays, and its issue, or face, price. The calculator returns the yield to maturity as a percentage, using the standard approximate YTM formula, which averages the annual coupon income with the amortised gain or loss between the price you pay and the amount you get back at maturity, measured against the average of the two prices. A bond bought below its issue price shows a YTM higher than its coupon rate, since you also gain by maturity, while a bond bought above issue price shows a lower YTM. Use this figure to compare bonds with different prices, coupons and terms on a like-for-like basis, or to check whether a bond on offer suits your return expectations. This is an indicative estimate based on the figures you enter, and it does not allow for tax, brokerage fees or reinvestment risk, so treat it as a guide only.
