Bond Yield Calculator
Three different yields answer three different questions. Coupon rate is fixed at issue; current yield reflects what you paid; yield to maturity is the only one that accounts for getting par back at the end.
The Bond
Price is per $100 of face value, the way bonds are normally quoted.
If held to maturity
Three yields, three questions
The coupon rate is fixed at issue and tells you the cash payment as a percentage of face value. Current yield is the annual coupon divided by what you actually paid, so it rises when the price falls. Yield to maturity is the internal rate of return if you hold to maturity and reinvest coupons at the same rate — the only figure that accounts for receiving par back at the end.
Price and yield move in opposite directions
The coupon payment is fixed in dollars. If the price falls, that same payment is a larger percentage of what you paid, so yield rises. This is not a market quirk but arithmetic, and it is why rising interest rates push existing bond prices down: new bonds pay more, so older ones must get cheaper to compete.
Premium, discount and the pull to par
A bond trading above face value is at a premium, below it at a discount. Whatever the price today, it converges on par as maturity approaches, because that is what gets repaid. A discount bond therefore delivers a capital gain in addition to coupons, which is why its yield to maturity exceeds its current yield — and the reverse for a premium bond.
Frequently Asked Questions
What is yield to maturity?
Why is yield to maturity higher than current yield on a discount bond?
Why do bond prices fall when interest rates rise?
Does YTM assume anything unrealistic?
Sources
Official publications only. Links open the original document in a new tab.
- U.S. Securities and Exchange Commission Compound interest — investor glossary Yield, price and time value basics
- Federal Reserve Board H.15 Selected interest rates Benchmark Treasury yields for comparison