📈 Yield to Maturity Calculator
Calculate the annualized return of a bond if held to maturity.
⚙️ Bond Parameters
💡 What is Yield to Maturity?
YTM is the total return anticipated on a bond if held until it matures. It considers both coupon payments and the difference between purchase price and face value, providing the most comprehensive measure of bond return.
When price < face value, YTM > coupon rate — you earn extra from the price appreciation.
When price > face value, YTM < coupon rate — the price premium reduces your effective return.
When price = face value, YTM = coupon rate.
❓ FAQ
How is YTM different from current yield?
Current yield = annual coupon / market price, only accounts for interest income. YTM also factors in price gains/losses, giving a more complete picture.
Is higher YTM always better?
Higher YTM suggests higher returns but may also indicate higher credit risk. Deeply discounted bonds often carry elevated default risk.
How does this calculator compute YTM?
It uses the Newton-Raphson iterative method to solve the present value equation, accurate to 0.0001%.