Bond Yield Calculator

Currency

Par value

Purchase price

Coupon, % a year

Years to maturity

Payments a year

Accrued interest

Result

Yield to maturity, %

14.02%

Current yield, %

12.63%

Annual coupon

$120.00

One payment

$60.00

Purchase cost

$950.00

Coupons to maturity

$360.00

Discount to par

$50.00

This result is informational only and is not professional advice.

Two yields that get confused constantly

Coupon yield against the purchase price and yield to maturity including accrued interest and any discount to par.

A bond has two yields and they mean different things. Current yield is the annual coupon divided by the purchase price and describes cash flow. Yield to maturity adds the gap between purchase price and par, spread across the remaining term.

When a bond trades below par, yield to maturity exceeds current yield: on top of coupons you collect the difference at redemption. Above par it works the other way, and buying at a large premium can lose money despite a generous coupon.

What this calculator shows

Yield to maturity and current yield
The annual coupon and the size of a single payment
Purchase cost including accrued interest, and the discount to par

What to keep in mind

Yield to maturity uses the approximation formula; a terminal figure may differ by a fraction of a percent.
Coupon reinvestment is not modelled, so this is a simple rather than effective yield.

FAQs

What is accrued interest?

The share of the coupon that has built up since the last payment. The buyer pays it to the seller on top of the price and then receives the whole coupon.

Current yield or yield to maturity?

Current yield describes cash flow; yield to maturity includes the price-to-par difference and is the fairer basis for comparing issues.

Is coupon income taxed?

Yes, on all coupons including government bonds, and on any gain from price movement. The broker withholds it.

Why do bond prices fall when rates rise?

New issues carry higher coupons, so older low-coupon bonds become less attractive. Their price falls exactly far enough to bring yield to maturity into line with the market.

Worked example

A bond bought at a discount

Input: Par 1,000 ₽, price 950 ₽, 12% coupon, 3 years to maturity

Output: Current yield 12.63%, yield to maturity about 13.3%

Note: The 50 rouble discount contributes an extra 16.67 ₽ a year, which is what lifts yield to maturity nearly a full point above current yield.

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Bond Yield Calculator

Result

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