Yield to Maturity Calculator
Yield to maturity (YTM) is the total annualised return an investor can expect to earn by purchasing a bond at the current market price and holding it until it matures, assuming all coupon payments are reinvested at the same yield. YTM is the internal rate of return (IRR) of the bond's cash flows and is the most complete measure of a bond's return. It accounts for the coupon payments, the time value of money, and any capital gain or loss arising from the difference between the purchase price and the face value received at maturity. This calculator solves for YTM using the Newton-Raphson iterative method, which is the same numerical technique used by professional bond analytics software. Enter your bond's face value, coupon rate, current market price, years to maturity, and payment frequency for an accurate YTM result.
Yield to maturity formula
Solve r such that: Price = sum(C / (1 + r)^t) + F / (1 + r)^n
where t = 1 to n, n = Years x freq
C = (Face x Annual Coupon Rate) / freq
YTM (annualised) = r x freq
The equation cannot be solved algebraically; Newton-Raphson iteration converges to the solution in typically fewer than 20 iterations.
Interpreting YTM
- YTM above coupon rate: bond is priced at a discount (below face value).
- YTM below coupon rate: bond is priced at a premium (above face value).
- YTM equals coupon rate: bond trades at par (face value).
- Higher YTM generally signals higher credit or duration risk.
- Comparing YTMs across bonds with identical credit quality reveals relative value.
Yield to maturity: frequently asked questions
What does yield to maturity assume?
YTM assumes you hold the bond to maturity and reinvest all coupon payments at the same YTM rate. In practice, reinvestment rates vary, so the actual realised return may differ. YTM is still the standard industry benchmark for comparing bonds.
How does YTM differ from current yield?
Current yield only considers the annual coupon divided by the current price. YTM also incorporates the capital gain or loss you will realise at maturity when the bond repays face value. For a discount bond, YTM is higher than current yield. For a premium bond, YTM is lower.
What is the bond-equivalent yield (BEY)?
Bond-equivalent yield doubles the semi-annual YTM to express it as an annual rate. Because most US bonds pay semi-annually, YTM is typically quoted as a BEY. This calculator reports the annualised YTM (periodic YTM multiplied by the number of periods per year).
Can YTM be negative?
Yes. If you pay significantly more than face value for a bond, the capital loss at maturity can exceed the coupon income, resulting in a negative YTM. This is not a hypothetical: European and Japanese government bonds traded at negative YTMs for several years after 2015.
How is YTM used in bond valuation?
YTM is the discount rate that equates a bond's cash flows to its current price. When you know the market YTM for similar bonds, you can calculate the fair price of any bond. If the calculated fair price exceeds the market price, the bond may be undervalued.
Official sources
- U.S. Treasury: Daily Treasury Yield Curve Rates.
- Federal Reserve Bank of St. Louis (FRED): Interest Rates.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.