Calculate current yield, yield to maturity, and yield to call for bonds with coupon rate, face value, and market price inputs.
A bond's coupon rate is not its yield. The calculator takes coupon rate, face value, market price, and years to maturity, plus call terms when the bond is callable, and returns current yield, yield to maturity (YTM), and yield to call (YTC). Current yield is plain division; YTM and YTC are the discount rates that make the bond's remaining cash flows equal its market price, found by iteration. The surprise most users hit: buy below par and YTM beats the coupon; buy above par and YTM falls below it.
A concrete input and expected output from the current implementation.
Input
Face value: $1,000 | Coupon rate: 5% paid annually | Market price: $950 | Years to maturity: 5 | Callable in 2 years at par
Expected output
Current yield: 5.26% | Yield to maturity: 6.19% | Yield to call: 7.80%
The $50 annual coupon divided by the $950 price gives 5.26%. Because the bond sells below par, YTM adds the capital gain at maturity, reaching 6.19%. With only two coupon periods before the call at par, YTC jumps to 7.80%, which is why issuers rarely call bonds trading below par.
Current yield divides the annual coupon payment by the market price. A $1,000 face-value bond with a 5% coupon pays $50 a year; bought at $950, that is $50 / $950 = 5.26%. The measure ignores the capital gain or loss from buying below or above par, the timing of payments, and the eventual return of principal, so it describes income, not total return.
Yield to maturity is the rate that discounts every remaining coupon plus the face value down to the market price; yield to call stops at the call date and uses the call price instead. The equation has no closed form, so it iterates until present value matches price, which is why premium bonds show YTM below their coupon and discount bonds above it. YTM assumes reinvestment of coupons at the same rate and holding to maturity.
The coupon is fixed as a percentage of face value, but yield depends on what you paid. Buy below par and you collect the coupon plus a capital gain at maturity, pushing YTM above the coupon; buy above par and the capital loss pulls YTM below it. Current yield sits in between because it reflects only the price, not the gain or loss.
The lower one. When a callable bond trades above par, the issuer can refinance more cheaply by calling it, so YTC is the yield you will most likely realize and the one to quote. When it trades below par, calling saves the issuer nothing, YTM is the better guide, and YTC becomes a curiosity.
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