The formulas
- Price = sum of C / (1 + y/m)^k + face / (1 + y/m)^n
- YTM = y solved by bisection, quoted as an annual rate (bond-equivalent for semiannual)
- Current yield = annual coupon / price
- Effective annual yield = (1 + y/m)^m - 1
How it works
Yield to maturity is the single discount rate that makes the present value of all coupons and principal equal the price. It assumes the bond is held to maturity, every payment arrives on time and coupons are reinvested at the same yield.
Current yield ignores the gain or loss as a discount or premium bond moves to face value, so it understates YTM on discount bonds and overstates it on premium bonds. Enter the clean price for a settlement on a coupon date. Between coupon dates, add accrued interest to get the full price.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Why is semiannual YTM shown as y and not (1 + y/2)^2 - 1?
US bond markets quote the bond-equivalent yield: twice the semiannual rate. The effective annual yield is shown in its own row.
Do I enter price per 100 or per bond?
Either, as long as face value uses the same scale.
What if years are not whole periods?
The tool rounds to the nearest coupon period. For an exact settlement date use a day-count method.
Formulas on this page are the standard definitions.
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.