Yield to Maturity Calculator
The annualized return on a bond held to maturity, plus current yield and the duration that measures interest rate risk.
Yield to maturity is the annualized return if you hold to maturity and reinvest every coupon at the same rate. It exceeds the current yield on a discount bond because you also collect the gain back to face value, and falls below it on a premium bond. Modified duration estimates the price move for a 1 point yield change: this bond would lose roughly 7.71% of its value if yields rose 1 point.
Yield to maturity is the single discount rate that makes the present value of every remaining coupon plus the face value equal today’s price. It is the standard measure for comparing bonds, and it assumes you hold to maturity and reinvest each coupon at that same rate, which rarely happens exactly.
Frequently asked questions
What is the difference between current yield and YTM?
Current yield is annual coupon income divided by price, ignoring the gain or loss to face value. Yield to maturity includes that, so it is higher for a discount bond and lower for a premium bond. YTM is the more complete measure.
Why do bond prices fall when interest rates rise?
A bond's coupon is fixed. When new bonds pay more, an existing bond only becomes competitive if its price falls far enough that the total return matches. Longer maturities fall further because more payments are affected.
What is duration?
The weighted average time until you receive the bond's cash flows, and a direct measure of interest rate sensitivity. Modified duration approximates the percentage price change for a one point yield move, so it is the practical number for judging risk.
Does YTM account for default risk?
No. It assumes every payment arrives on schedule. A high yield relative to Treasuries is the market pricing in credit risk, so a corporate bond yielding far above the government curve is compensating you for the chance it does not pay.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.