Bond yield calculator
Estimate current yield and approximate YTM from a bond's price, coupon, and maturity.
What this calculator covers
Use this calculator to estimate a bond's current yield and an approximate yield to maturity from basic market inputs.
It is designed as a quick planning tool and clearly states that the YTM figure is an approximation rather than an exact root-solved yield.
Frequently asked questions
- What is current yield and how does it differ from yield to maturity?
- Current yield is simply the annual coupon divided by the bond's market price. It measures only the income portion of your return and ignores any gain or loss as the bond moves toward face value at maturity. Yield to maturity includes both the coupon income and the pull-to-par price change spread across the remaining term.
- Why is the YTM shown here called approximate?
- The calculator uses a shortcut formula that averages the face value and price in the denominator rather than solving the exact internal rate of return iteratively. For most planning purposes the difference is small, but for precise portfolio accounting an exact solver is preferable.
- Does a lower bond price always mean a higher yield?
- Yes, holding the coupon fixed. When the price falls, the same coupon dollars represent a larger percentage of what you paid, so both current yield and YTM rise. This inverse relationship between price and yield is a foundational concept in fixed-income analysis.
- What does it mean when approximate YTM is higher than current yield?
- It means the bond is trading below its face value — at a discount. The extra return comes from the bond's price rising back toward par by maturity. When a bond trades at a premium, the opposite holds: YTM falls below current yield because the price decline to par erodes part of the coupon income.
Tool
Run the calculation
Result
RESULT · APPROXIMATE YTM
â„–204
Primary result
5.61%
A bond priced at $960.00 with a 5% coupon has a current yield of 5.21% and an approximate YTM of 5.61%.
- Current yield
- 5.2083%
- Approximate YTM
- 5.6122%
- Annual coupon
- $50.00
- Coupon per period
- $25.00
Step-by-step solution
- 1.Compute the annual coupon from face value and coupon rate: $1,000.00 × 5% = $50.00.
- 2.Current yield is the annual coupon divided by the bond price, or $50.00 ÷ $960.00.
- 3.Approximate YTM adds the annualized price pull-to-par term and divides by the average of face value and price; this is a shortcut, not a root-solved exact YTM.
Walkthrough
Visual walkthrough
Bond yield summaries combine the cash income from coupons with the gain or loss from a bond moving toward par by maturity.
01
Measure the coupon income
$50.00 per year
Current yield starts with the annual coupon dollars the bond pays at the stated coupon rate.
02
Compare coupon income with market price
$50.00 ÷ $960.00
Current yield rises when the same coupon stream is bought at a lower price.
03
Approximate the full yield
Approximate YTM also accounts for the bond’s price moving back toward face value over the remaining years to maturity.
5.61% approximate YTM