Bond Yield — Smart Financial Analysis
Calculate current yield, YTM, BEY, EAY, and tax-equivalent yield. Understand yield curve inversion, credit spread, and when munis beat corporates.
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Current Yield = annual coupon ÷ current price. Yield to Call (YTC) is the return you earn if the issuer redeems the bond early at the call price before maturity. An inverted yield curve occurs when short-term rates (e.g., 2-year Treasury) exceed long-term rates (e.g., 10-year). Yield spread = corporate (or other) bond yield minus Treasury yield of similar maturity.
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Why: The main types are: Current Yield (annual coupon ÷ price — simple but incomplete), Yield to Maturity or YTM (IRR equating all cash flows to price — the gold standard), Yield to ...
How: Enter Face Value ($), Coupon Rate (%), Current Price ($) to get instant results. Try the preset examples to see how different scenarios affect the outcome, then adjust to match your situation.
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Bond Yield Calculator — The Income Investor's North Star
Current yield, YTM, yield to call, tax-equivalent yield. Understand yield curve inversion and credit spread.
📋 Example Scenarios — Click to Load
Enter Your Bond
🤖 AI Analysis
Your bond trades at a discount — YTM (5.66%) exceeds Current Yield (5.26%). You'll earn capital appreciation at maturity plus coupon income.
Yield Curve — 1yr Through 30yr
Yield Types Comparison
Yield vs Price Relationship
Credit Spread by Rating
Disclaimer: This calculator provides theoretical bond yield estimates. Actual yields may differ due to credit risk, liquidity, embedded options, and market conditions. Not financial advice.
For educational purposes only — not financial advice. Consult a qualified advisor before making decisions.
💡 Money Facts
Bond Yield analysis is used by millions of people worldwide to make better financial decisions.
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— NBER Research
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Globally, only 33% of adults are financially literate, making tools like this essential.
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Bond yield is the return an investor earns — but which yield? Current yield (annual coupon / price) ignores capital gains. YTM (Yield to Maturity) accounts for coupon income, price appreciation, and reinvestment — the most complete measure. When the yield curve inverts (short rates > long rates), recession typically follows within 12-18 months — it inverted in 2022 before the 2023 slowdown. Tax-equivalent yield for municipal bonds: TEY = Tax-Free Yield / (1 - Tax Rate). At 37% bracket, a 3.5% muni = 5.56% taxable equivalent — often better than corporate bonds!
📈 By the Numbers
📋 Key Takeaways
- • Current Yield = annual coupon ÷ price — simple but ignores capital gain/loss
- • YTM = full picture — coupon income, price appreciation, reinvestment
- • Yield curve inversion = recession signal within 12-18 months
- • TEY = muni yield ÷ (1 − tax rate) — compare munis to corporates
📐 How It Works
- Current Yield: Annual coupon ÷ current price. Quick but misleading — ignores time value and capital gain/loss.
- YTM: Internal rate of return equating all cash flows to price. The gold standard for bond comparison.
- Yield to Call: Return if issuer redeems early at call price. Use when bond is callable and rates have fallen.
- Tax-Equivalent Yield: TEY = muni yield ÷ (1 − tax rate). At 37% bracket, 3.5% muni = 5.56% taxable equivalent.
💡 Tips
- Always compare YTM — not just current yield — when evaluating bonds.
- Use TEY for munis vs corporates if you're in a high tax bracket.
- Watch the yield curve: inversion has preceded every U.S. recession since 1955.
- Credit spread = corporate yield − Treasury — wider spread = higher risk.
📊 Yield Types
| Yield Type | Formula / Description |
|---|---|
| Current Yield | Annual coupon ÷ market price |
| YTM | IRR equating all cash flows to price |
| Yield to Call | IRR if called at call price on call date |
| Tax-Equivalent Yield | Muni yield ÷ (1 − tax rate) |
❓ Frequently Asked Questions
What are the main types of bond yields?
The main types are: Current Yield (annual coupon ÷ price — simple but incomplete), Yield to Maturity or YTM (IRR equating all cash flows to price — the gold standard), Yield to Call or YTC (return if issuer calls early at call price), and Tax-Equivalent Yield or TEY (for munis: tax-free yield ÷ (1 − tax rate)). Each serves a different purpose. Use YTM for most comparisons.
What's the difference between Current Yield and YTM?
Current Yield = annual coupon ÷ current price. It ignores capital gains/losses at maturity and time value of money. YTM is the internal rate of return that equates all future cash flows (coupons + face value) to today's price. For a bond at a discount, YTM exceeds Current Yield; at a premium, YTM is lower. YTM is the metric serious investors use.
What is Yield to Call and when does it matter?
Yield to Call (YTC) is the return you earn if the issuer redeems the bond early at the call price before maturity. It matters for callable bonds — when interest rates fall, issuers often call high-coupon bonds to refinance. YTC uses the call date and call price instead of maturity. If YTC is lower than YTM, the bond may be called — use YTC as your expected return.
What does an inverted yield curve mean?
An inverted yield curve occurs when short-term rates (e.g., 2-year Treasury) exceed long-term rates (e.g., 10-year). It has preceded every U.S. recession since 1955 — typically recession follows within 12-18 months. The curve inverted in 2022 before the 2023 slowdown. Investors accept lower long-term yields when they expect rates and growth to fall.
What is yield spread and why does it matter?
Yield spread = corporate (or other) bond yield minus Treasury yield of similar maturity. It compensates for credit risk. AAA corporate might trade 50bp over Treasury; high-yield 300bp+. Wider spread = higher perceived risk. Spreads widen in recessions and tighten in expansions. Use spread to compare bonds across credit tiers.
How do I calculate tax-equivalent yield for municipal bonds?
Tax-Equivalent Yield (TEY) = Tax-Free Muni Yield ÷ (1 − Tax Rate). At 37% bracket, a 3.5% muni = 3.5 ÷ (1 − 0.37) = 5.56% taxable equivalent. Compare TEY to corporate yields — munis often win for high-bracket investors. Use your marginal federal tax rate.
💡 Did You Know?
📚 Sources
- • Treasury Direct
- • Federal Reserve
- • MSRB
- • CFA Institute
Disclaimer: This calculator provides theoretical bond yield estimates based on standard fixed-income models. Actual yields may differ due to credit risk, liquidity, embedded options, day-count conventions, and market conditions. Not financial advice — consult a financial professional before making investment decisions.
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