About the Yield to Maturity Calculator
What is the Yield to Maturity Calculator?
Yield to maturity (YTM) is the total annual return you earn if you buy a bond at today's price and hold it until it is repaid, receiving every coupon along the way. It is the standard way to compare bonds, debentures and government securities with different coupons and maturities.
Enter the bond's face value, coupon rate, market price, years left to maturity and coupon frequency. The calculator solves for the exact YTM, converts it to an effective annual yield and also shows the quick approximation many textbooks use.
How to use the Yield to Maturity Calculator
- Face Value (₹) (sample: 1,000)
- Coupon Rate (% per year) (sample: 7.5)
- Current Market Price (₹) (sample: 980)
- Years to Maturity (sample: 5)
- Coupon Payments (sample: Twice a year (semi-annual))
- Press Calculate YTM (results also refresh as you type). The result card shows the Yield to Maturity, along with Effective annual yield, Approximate YTM (shortcut formula), Current yield and Capital gain / loss at maturity.
Formula used
Price = Σ (C ÷ f) ÷ (1 + y ÷ f)ᵗ + F ÷ (1 + y ÷ f)ⁿ
- y = the yield to maturity (solved numerically)
- Approximate YTM = (C + (F − P) ÷ N) ÷ ((F + P) ÷ 2)
- Effective yield = (1 + y ÷ f)^f − 1
N is the number of years to maturity and P the price. The approximation is usually within a few basis points for bonds priced near par.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Face Value (₹) | 1,000 |
| Coupon Rate (% per year) | 7.5 |
| Current Market Price (₹) | 980 |
| Years to Maturity | 5 |
| Coupon Payments | Twice a year (semi-annual) |
| Result | Value |
|---|---|
| Yield to Maturity (YTM) | 7.993% |
| Effective annual yield | 8.153% |
| Approximate YTM (shortcut formula) | 7.98% |
| Current yield | 7.653% |
| Capital gain / loss at maturity | ₹20 |
| Total coupons to maturity | ₹375 |
Tips for using the Yield to Maturity Calculator
- For zero-coupon bonds, YTM = (F ÷ P)^(1 ÷ N) − 1.
- Compare a bond's YTM with FD rates and government bond yields of similar maturity.
- YTM ignores taxes; interest and capital gains on bonds are taxed differently.