Bond Yield Calculator Formula
Understand the math behind the bond yield calculator. Each variable explained with a worked example.
Formulas Used
Current Yield
current_yield = current_price > 0 ? annual_coupon / current_price * 100 : 0Approx. Yield to Maturity
approx_ytm = current_price > 0 ? (annual_coupon + (face_value - current_price) / years_to_maturity) / ((face_value + current_price) / 2) * 100 : 0Annual Coupon Payment
annual_coupon_out = annual_couponVariables
| Variable | Description | Default |
|---|---|---|
face_value | Face Value(USD) | 1000 |
coupon_rate | Coupon Rate(%) | 5 |
current_price | Current Market Price(USD) | 950 |
years_to_maturity | Years to Maturity(years) | 10 |
annual_coupon | Derived value= face_value * coupon_rate / 100 | calculated |
How It Works
Bond Yield Formulas
Current Yield = Annual Coupon / Market Price × 100%
Approx. YTM = (Coupon + (Face - Price)/n) / ((Face + Price)/2) × 100%
The YTM approximation gives a reasonable estimate without iterative calculation.
Worked Example
$1,000 bond with 5% coupon trading at $950, maturing in 10 years.
face_value = 1000coupon_rate = 5current_price = 950years_to_maturity = 10
- 01Annual coupon = $1,000 × 5% = $50
- 02Current yield = $50 / $950 = 5.26%
- 03Approx. YTM = ($50 + ($50/10)) / (($1,000 + $950)/2) = $55 / $975 = 5.64%
Ready to run the numbers?
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