Current Yield
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Yield to Maturity (approx)
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Annual Coupon Payment
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When Should You Use This?
Use this to evaluate bonds before buying. Current yield only shows the income return, while yield to maturity (YTM) includes the gain or loss from buying at a discount or premium to face value.
How It Works
1
Enter Bond Details
Input the face value (usually $1,000), coupon rate, current market price, and years until the bond matures.
2
Compare Yields
Current yield ignores capital gains/losses. YTM is the total return if held to maturity. Always compare YTM when evaluating bonds.
3
Evaluate
Compare YTM to similar bonds, inflation, and stock earnings yields to determine if the bond is attractively priced.
Frequently Asked Questions
Current yield = annual coupon / market price. YTM includes coupon payments AND the gain/loss from price converging to face value at maturity. YTM is the more complete measure.
Bond prices move inversely to interest rates. When rates rise, existing bonds with lower coupons become less attractive, so their prices fall (and yields rise).
Discount: price < face value (YTM > coupon rate). Premium: price > face value (YTM < coupon rate). At par: price = face value (YTM = coupon rate).
Only if you hold to maturity AND the issuer doesn't default. YTM assumes you reinvest all coupons at the same rate, which may not happen in practice.
Bonds offer more predictable income but lower long-term returns. Use bonds for capital preservation and income; stocks for growth. A balanced portfolio includes both.