Bond Yield Calculator

YTM is the total annualized return you earn if you buy a bond at its current price and hold it until maturity, assuming every coupon is reinvested at the same yield. It is the single discount rate that makes the present value of all coupon payments and the face value equal to the price you paid.

Current yield only divides the annual coupon by the price you paid, so it ignores any capital gain or loss between today's price and the bond's face value at maturity. YTM folds that gain or loss into the rate, which is why a discount bond's YTM is higher than its current yield and a premium bond's YTM is lower.

If you pay 900 dollars for a bond that redeems at 1,000 dollars, you collect the coupon every period plus a 100 dollar capital gain at maturity. YTM blends both pieces into one annualized return, so it sits above the coupon rate. The reverse happens for a premium bond bought above par.

Most US corporate and Treasury bonds pay coupons twice a year, so semiannual is the standard default. Use annual for bonds that pay once a year (common in Europe), quarterly for some floating-rate notes, and monthly for certain mortgage-backed and retail-targeted bonds.

Macaulay duration is the weighted-average time until you receive a bond's cash flows, measured in years. Modified duration adjusts that figure by dividing by (1 + periodic yield) and estimates the percentage price change you can expect for a one-percentage-point shift in yields. A 7-year modified duration means roughly a 7 percent price drop if yields rise by 1 percentage point.