# Yield Calculator

Calculate a bond’s yield to maturity (YTM) by entering the bond’s ISIN

## What is a bond yield to maturity (bond YTM)?

A bond yield to maturity is the internal rate of return (IRR) of an investment in a bond if the investor holds the bond until maturity.

## How to calculate the YTM of a bond?

The yield to maturity of a bond is the discount rate at which the sum of all future cash flows from the bond (coupons and principal) is equal to the price of the bond.

## What is a bond price?

A bond's price is what investors are willing to pay for an existing bond. Bond prices are expressed in terms of percentage of face (par) value.

## What is the relationship between bond price and yield?

Price and yield are inversely related: as the price of a bond goes up, its yield goes down, and vice versa.

## What is the relationship between bond price and interest rates?

Price and interest rates are also inversely related: as the interest rates goes up, the bond price will usually decrease, and vice versa. Indeed investors will be willing to pay a premium for a bond with a higher coupon rate than prevailing interest rate, and will generally expect a discount for bonds whose coupon rate is lower than prevailing interest rates. Other factors may also affect the price of a bond, such as the issuer’s reputation and rating.

## About yields

Yield is a general term relating to the return on the capital you invest in a bond. There are several bond yields to consider when calculating the potential return: coupon yield, current yield, yield-to-maturity, yield-to-call and yield-to-worst.

**Coupon yield** is the annual interest rate established when the bond is issued. It's the same as the coupon rate.

**Current yield** is the bond's coupon yield divided by its market price.

A bond return calculator will allow you to calculate **yield to maturity (YTM) and yield to call (YTC) which takes into account the impact on a bond's yield if it is called prior to maturity.**

The **yield to worst (YTW)** will be the lowest of the YTM and YTC. It is the most conservative potential return a bond will give you.

The bond yield calculator on this page calculates the yield to maturity (YTM) of a bond based on its ISIN (International Securities Identification Number).