A bond's coupon isn't its real return. Enter the face value, coupon, market price and years left to get the current yield and approximate yield to maturity (YTM), and see whether you're paying a premium or buying at a discount.
Answer first: a bond's yield is the return you actually earn, which differs from its coupon rate whenever you pay more or less than face value. This bond yield calculator gives you both the current yield (income vs price) and an approximate yield to maturity (total return if you hold to the end).
Current yield = Annual coupon ÷ Price. Approx YTM = [Coupon + (Face − Price) ÷ Years] ÷ [(Face + Price) ÷ 2].
Example: a $1,000 bond with a 5% coupon ($50/yr) trading at $950 with 10 years left has a current yield of 5.263% and an approximate YTM of 5.641%. The YTM is higher because you also capture the $50 pull-to-par gain by maturity.
The key insight is the inverse relationship: bond prices and yields move in opposite directions. Buy a bond below face value (at a discount) and your yield rises above the coupon, because you collect the same coupons on a smaller outlay and get the full face value back at maturity. Pay above face (a premium) and your yield falls below the coupon.
True YTM is the discount rate that sets the present value of all future coupons plus the face value equal to today's price — it has no clean closed-form solution and is normally found by iteration. The formula above is the widely used approximation; it's accurate to a few basis points for typical bonds and perfect for comparing two bonds at a glance. For precise pricing on long or deeply discounted bonds, use a financial calculator or spreadsheet's YIELD function.
Reality check: The YTM here is the standard approximation, assumes annual coupons and holding to maturity, and ignores reinvestment-rate risk, accrued interest, call features, taxes and default risk. Use a spreadsheet for precise pricing. This is an educational calculator, not financial advice — verify your own numbers and see the U.S. SEC at investor.gov.
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Last updated 21 June 2026 · Written by Mustafa Bilgic. Educational only — not financial advice.
The coupon rate is fixed at issue and set against the face value. The yield reflects what you actually earn based on the price you pay. Buy below face value and your yield exceeds the coupon; pay above and it falls below.
Divide the annual coupon payment by the bond's current market price. A $1,000 bond paying a 5% coupon ($50) at a $950 price has a current yield of about 5.26%. It measures income only, not capital gain or loss to maturity.
YTM is the total annualized return if you hold the bond until it matures, counting both the coupons and the gain or loss as the price pulls to face value. It's the truest single measure for comparing bonds, and is higher than current yield for discount bonds.
Exact YTM is the rate that discounts all future coupons plus face value back to today's price, which requires iteration. This tool uses the standard approximation formula, accurate to a few basis points for typical bonds — use a spreadsheet's YIELD function for precise pricing.