Bond Yield Calculator

YTM is the total return anticipated if you hold the bond until it matures, accounting for current price, coupon payments, and the difference between price and face value. It is the most comprehensive bond yield measure and allows apples-to-apples comparison between different bonds.

Current yield = Annual coupon / Market price. Simple but ignores price appreciation/depreciation. YTM accounts for the gain/loss from buying at a discount/premium plus all coupon payments. When comparing bonds, always use YTM.

If rates rise, newly issued bonds offer higher coupons. Your existing bond with a lower coupon becomes less attractive, so its price falls to compensate. If rates fall, your higher-coupon bond becomes more valuable and its price rises. This inverse relationship is fundamental to bond investing.

Duration measures how sensitive a bond price is to interest rate changes. A 10-year duration bond drops ~10% in price if rates rise 1%. Longer maturity and lower coupon = higher duration = more rate sensitivity. Duration helps investors manage interest rate risk.

Discount bond: price below face value (market rate > coupon rate). Premium bond: price above face value (market rate < coupon rate). At maturity, you always receive the face value, so discount bonds have built-in capital gains and premium bonds have built-in losses — both reflected in YTM.