Use our free Yield to Maturity (YTM) Calculator to determine the total return an investor can expect from a bond if held until maturity. Understand your bond's true profitability by considering its current price, coupon rate, face value, and years to maturity. Ideal for savvy bond investors.
Formula:
Yield to Maturity (YTM) is the total return anticipated on a bond if it is held until it matures. It is the discount rate that equates the present value of a bond's future cash flows (coupon payments and face value) to its current market price. Since there is no direct algebraic formula, YTM is typically found through an iterative process, but can be approximated using:
Approximate YTM Formula:
YTM ≈ (C + (FV - PV) / N) / ((FV + PV) / 2)
- C = Annual Coupon Payment (Coupon Rate × Face Value)
- FV = Face Value (Par Value) of the bond
- PV = Current Market Price of the bond
- N = Number of years to maturity