Bond Yield Calculator
Bond yield measures the return an investor earns on a bond relative to its current price. There are several yield measures, each serving a different analytical purpose. The nominal (coupon) yield is simply the annual coupon divided by face value. The current yield uses the actual market price as the denominator. Yield to maturity (YTM) is the most informative measure, accounting for all coupon payments, the difference between purchase price and face value at maturity, and the time value of money. This calculator computes all three yield measures. YTM is solved using the Newton-Raphson iterative method, which finds the discount rate that makes the present value of all bond cash flows equal to the current market price. This is the same approach used by Bloomberg terminals and professional bond analytics systems.
Bond yield formulas
Nominal Yield = Annual Coupon / Face Value
Current Yield = Annual Coupon / Current Price
YTM: solve r such that Price = sum(C/(1+r/f)^t) + F/(1+r/f)^n
where t runs from 1 to n = Years x freq, C = Face x Rate / freq
YTM is solved iteratively using Newton-Raphson with 100 iterations for precision to 6 decimal places.
Yield measures compared
- Nominal yield: simple ratio of annual coupon to face value; ignores price differences from par.
- Current yield: ratio of annual coupon to current price; better for income comparison but ignores maturity value.
- Yield to maturity: most complete; accounts for all cash flows, time value, and the pull-to-par effect.
- For a discount bond (price below par): YTM > current yield > nominal yield.
- For a premium bond (price above par): YTM < current yield < nominal yield.
Bond yield: frequently asked questions
What is the difference between coupon rate and current yield?
The coupon rate is fixed at issuance and is based on the bond's face value. The current yield is the annual coupon payment divided by the bond's current market price. If the bond trades at a discount (below face value), the current yield is higher than the coupon rate. If it trades at a premium, the current yield is lower.
What is yield to maturity (YTM)?
Yield to maturity is the total return you would earn if you bought the bond at today's price, held it to maturity, and reinvested all coupon payments at the same YTM rate. It is the most comprehensive yield measure and is the internal rate of return of the bond's cash flows.
Why does bond yield matter to investors?
Yield allows you to compare bonds with different coupons, maturities, and prices on an apples-to-apples basis. A bond paying $50 per year but priced at $900 yields more than one paying $50 priced at $1,100. Yield is the true return on your invested capital.
What is the approximate YTM formula?
The approximate YTM formula is: YTM = (C + (F - P) / n) / ((F + P) / 2), where C is the annual coupon, F is face value, P is current price, and n is years to maturity. This is an approximation; the exact YTM requires an iterative numerical solution (Newton-Raphson), which this calculator performs.
Can bond yields be negative?
Yes. In some countries (notably Japan, Germany, and Switzerland in recent years), investors have accepted negative yields on government bonds, meaning they paid more than face value at maturity. This can occur when investors prioritise safety or when central bank policy drives rates below zero.
Official sources
- U.S. Treasury: Interest Rate Data.
- Federal Reserve: Selected Interest Rates (H.15).
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.