How is YTM different from the coupon rate?

Coupon rate is the stated annual interest as a percentage of par value. YTM is the total annualized return if held to maturity, including the price discount or premium. They differ whenever the bond trades away from par.

If a bond is priced at $950 with 5% coupon and 5 years to maturity, what is YTM?

Approximately 6.1%. The $50/year coupon plus $50 principal gain over 5 years yields more than the coupon rate alone.

What is the relationship between bond prices and yields?

Inverse relationship: when interest rates rise, existing bond prices fall to make their yield competitive. When rates fall, prices rise. Duration measures this interest rate sensitivity.

Bond Yield to Maturity Calculator

Calculate the total return of a bond held to maturity given current price, par value, coupon rate, and years remaining. The most comprehensive bond yield measure.

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Annual Rate (%)

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Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate the total return of a bond held to maturity given current price, par value, coupon rate, and years remaining. The most comprehensive bond yield measure. Use the bond yield to maturity result to inform your calculation.

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Frequently Asked Questions

How is YTM different from the coupon rate?

If a bond is priced at $950 with 5% coupon and 5 years to maturity, what is YTM?

What is the relationship between bond prices and yields?