Bond Yield Calculator
What a bond actually returns at the price you pay, not at par.
- Annual coupon
- ₹80.00
- All 10 coupons still to come
- ₹400.00
- To earn the coupon rate flat, you would pay
- ₹1,000.00
- Total received if held to maturity
- ₹1,400.00
Every payment still to come10 payments
| Period | Years out | Amount | What it is |
|---|---|---|---|
| 1 | 0.50 | ₹40.00 | coupon |
| 2 | 1.00 | ₹40.00 | coupon |
| 3 | 1.50 | ₹40.00 | coupon |
| 4 | 2.00 | ₹40.00 | coupon |
| 5 | 2.50 | ₹40.00 | coupon |
| 6 | 3.00 | ₹40.00 | coupon |
| 7 | 3.50 | ₹40.00 | coupon |
| 8 | 4.00 | ₹40.00 | coupon |
| 9 | 4.50 | ₹40.00 | coupon |
| 10 | 5.00 | ₹1,040.00 | coupon + face value |
Yield to maturity is the single rate that discounts exactly these amounts back to the price you pay.
Current yield divides the annual coupon by what you actually pay, so it moves with the price but ignores everything that happens at maturity. Yield to maturity is the rate that discounts every remaining coupon and the face value back to that price, which is why the two only agree when a bond trades exactly at par. Buy below par and YTM is the higher of the two, because the pull back to face value is a gain you also collect; buy above par and it is the lower, because that premium is a loss you have already accepted. YTM assumes you hold to maturity, that the issuer pays, and that every coupon is reinvested at the same rate — three assumptions that make it a comparison tool rather than a promised return, which is exactly how a debt fund’s portfolio YTM should be read too.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
This calculator reports what a bond actually returns at the price you pay for it, rather than at its face value. Enter the face value, the market price, the coupon rate, the years left to maturity and how often the coupon is paid, and it computes both the current yield and the yield to maturity, along with every remaining cash flow.
The defaults are a ₹1,000 face value bond bought at ₹950 with an 8% coupon paid half-yearly and five years left. Because it is bought below par, the current yield is above the coupon rate and the yield to maturity is higher still — the ₹50 pull back to face value at redemption is a gain collected on top of the coupons.
The two measures answer different questions. Current yield is the annual coupon divided by the price, so it tells you the running income on the money committed and ignores everything at maturity. Yield to maturity is the single rate that discounts every remaining coupon and the face value back to that price, so it is the one that lets two bonds with different prices, coupons and maturities be compared.
Yield to maturity assumes the bond is held to maturity, that the issuer pays in full and on time, and that every coupon is reinvested at the same rate. None of the three is guaranteed, which is why YTM is a comparison tool rather than a promised return — and it is the same caveat that applies to the portfolio YTM a debt mutual fund discloses in its factsheet.
Price = SUM of coupon / (1 + y/f)^t for each period t, plus face value / (1 + y/f)^n; current yield = annual coupon / pricey is the annual yield to maturity, f the number of coupons a year and n the total number of periods left. There is no closed form for y, so it is solved numerically — the price falls as the yield rises, so exactly one rate fits any given price.
Frequently asked questions
What is the difference between current yield and yield to maturity?
Current yield is the annual coupon divided by the market price, so it measures running income only. Yield to maturity is the rate that makes the present value of all remaining coupons plus the face value equal the price paid, so it also captures the gain or loss from the price returning to par at redemption. The two are equal only when a bond trades exactly at its face value.
Why does a bond's yield rise when its price falls?
The coupon and the redemption amount are fixed in rupees by the terms of the bond, so paying less for that same fixed stream means earning a higher return on the money committed. This inverse relationship is why bond prices fall when market interest rates rise: existing bonds must reprice downward until their yield matches what newly issued bonds offer.
Is yield to maturity a guaranteed return?
No. YTM rests on three assumptions: that the bond is held all the way to maturity, that the issuer pays every coupon and repays the face value, and that each coupon is reinvested at the same YTM. Selling early exposes you to price changes, a default breaks the second assumption entirely, and reinvestment rates move with the market. It is best read as a standardised way to compare bonds, not a rate anyone has promised.
How should I read the YTM a debt mutual fund discloses?
A debt fund's portfolio YTM is the weighted average YTM of the bonds it holds, before the fund's expense ratio and before any credit event. It is what the portfolio would earn if nothing went wrong and nothing were charged, so the return an investor could expect is materially lower. A YTM well above peers usually describes the credit risk being taken rather than a bargain being found.
Go further
The deposit comparison a bond yield is usually judged against.
A government fixed-income alternative with a notified rate.
Why a high YTM is a disclosure of risk, not a forecast of return.
How a portfolio of these behaves as a single holding.
What happens when a manager moves along the maturity curve.