Yield to Maturity Calculator

The annual return if you hold the bond to maturity and reinvest the coupons at the same rate. It accounts for the coupon and for the capital gain or loss against the face value.

Current yield is just the coupon over the price and ignores what happens at maturity. A bond bought at a discount returns more than its current yield suggests; one bought at a premium returns less.

Because it appears inside a sum of discounted cash flows with no algebraic solution. This uses bisection, which cannot diverge, over the range a bond's yield can plausibly occupy.

It predicts price sensitivity to interest rates. A bond with a duration of seven loses roughly 7% of its value for each percentage point rates rise — which is why long bonds fall so much harder than short ones.

Because the coupon is fixed and market yields are not. When rates rise, an existing bond's fixed coupon is worth less, so its price falls until its yield matches what is available elsewhere.