Yield to Maturity Calculator

How to Use the Yield to Maturity Calculator

1. Enter the Face Value of the bond (the amount paid at maturity).
2. Enter the Current Price of the bond (what you paid for it).
3. Enter the Years to Maturity (how many years until the bond matures).
4. Enter the Coupon Rate (the annual interest rate paid by the bond).
5. Click the Calculate button to compute the Yield to Maturity.

Understanding Yield to Maturity (YTM)

Yield to Maturity (YTM) is the total return anticipated if the bond is held until it matures. It accounts for all future cash flows from the bond, including coupon payments and the return of principal at maturity.

The formula used in this calculator is:

YTM = [Coupon Payment * (1 - (1 + YTM)^-n) / ((1 + YTM)^n - 1)] + [FV / ((1 + YTM)^n - 1)]

Where:

• Coupon Payment = Face Value * Coupon Rate
• n = Years to Maturity
• FV = Face Value

This calculator uses the Newton-Raphson method to iteratively solve for YTM, ensuring accurate results even for complex bond structures.