Bond Calculator
Calculate yield to maturity, current yield, duration, and view payment schedules for any bond type.
Results
Yield to Maturity (YTM)
5.73%
Trading at Discount
$1,500
Total Return
Face Value
Total Interest
Yield to Maturity
5.73%
Current Yield
5.26%
Duration
7.89 yrs
Total Interest
$500
Payment Schedule
| Period | Date | Coupon Payment | Cumulative Interest |
|---|
Understanding Bond Calculations
Current Yield
Current Yield = Annual Coupon / Market Price
A simple measure that compares the annual interest payment to the current price. It does not account for capital gains or losses at maturity.
Yield to Maturity (YTM)
Price = Sum of [C/(1+YTM)^t] + FV/(1+YTM)^n
The total return expected if the bond is held until maturity. It accounts for all coupon payments, face value, and the time value of money.
Macaulay Duration
D = Sum of [t x PV(CF_t)] / Bond Price
Measures interest rate sensitivity. A higher duration means greater price volatility when interest rates change. Useful for portfolio immunization.
Frequently Asked Questions
Yield to maturity (YTM) is the total return anticipated on a bond if held until it matures. It accounts for all coupon payments, the face value at maturity, and the current market price. YTM is expressed as an annual rate and is considered the most accurate measure of a bond's return because it factors in the time value of money.
Current yield only considers the annual coupon payment relative to the bond's current price (Annual Coupon / Current Price). Yield to maturity is more comprehensive, factoring in the time value of money, all future coupon payments, and the difference between the purchase price and face value at maturity. YTM is generally considered a better measure of total return.
Bond duration measures how sensitive a bond's price is to changes in interest rates. It represents the weighted average time until all cash flows are received. A higher duration means greater price sensitivity to interest rate changes. For example, a duration of 5 years means a 1% rise in rates would cause approximately a 5% drop in the bond's price.