Bond yield (YTM) calculator
Bought, or thinking of buying, a bond below or above its face value? Enter the face value, price, coupon and years left to get the approximate yield to maturity, current yield and the capital gain or loss baked in.
Approximate yield to maturity
Approximate yield to maturity 9.49 percent.
Approximate yield on a ₹1,000 bond bought for ₹980, paying a 9% coupon, with 5 years left to maturity.
This is an approximation of the exact IRR, close enough to compare bonds quickly but not a precise quote.
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Bonds we track currently yielding closest to 9.49%, the approximate figure above.
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See the full highest-yield listHow this is calculated
Yield to maturity is the return a bond gives if held to maturity and every coupon is reinvested at that same rate. Solving for the exact figure needs trial and error, so this calculator uses the standard approximate formula, close enough for comparing bonds day to day.
ytm = (C + (F - P) / n) / ((F + P) / 2)
C = annual coupon in rupees = face value x coupon rate / 100
F = face value, P = price paid, n = years to maturity
current yield = C / P
total coupons over the holding period = C x n
capital gain or loss at maturity = F - P
This is an approximation of the exact internal rate of return (IRR), not the precise figure. It spreads the gap between price and face value evenly across the years, which the real cash flows do not do.
- The formula spreads any gain or loss between price and face value evenly over the years to maturity. It does not model exactly when that gain is realised.
- Coupon frequency, monthly, quarterly, semi-annual or annual, does not change the estimate here. Only the total annual coupon rupee amount matters to this formula.
- Accrued interest, brokerage and any TDS on the coupon are not included.
- For a bond close to maturity, a small number of years, or trading far from face value, the approximate formula diverges more from the exact IRR. Treat the output as a quick estimate, not a precise quote.
Frequently asked questions
What does approximate YTM mean, and how is it different from the exact yield?
This calculator uses the standard approximate yield formula, ytm = (C + (F - P) / n) / ((F + P) / 2), where C is the annual coupon in rupees, F is face value, P is the price paid and n is years to maturity. It is a well-known shortcut, not the exact internal rate of return. The exact IRR needs to solve for the rate that discounts every future coupon and the final repayment back to today's price, which usually means trial and error or a financial calculator. The approximate formula is normally within a few basis points of the exact figure for typical corporate bond terms, close enough to compare bonds quickly.
Why would a bond trade below its face value?
A bond trades at a discount, price below face value, when its fixed coupon is less attractive than what new bonds of similar risk currently pay, or when the market has grown less confident in the issuer. Buying at a discount adds a capital gain at maturity on top of the coupon, which is exactly why the approximate yield formula adds (F - P) / n to the coupon: it spreads that gain over the remaining years.
Why would a bond trade above its face value?
A bond trades at a premium, price above face value, when its coupon is higher than what comparable new bonds pay today, so investors are willing to pay extra now to lock in that above-market coupon. At maturity you get back only the face value, so the premium you paid is a capital loss spread over the holding period, which is why (F - P) / n turns negative in the formula when price exceeds face value.
Does the payout frequency, monthly, quarterly or annual, change the yield?
Not in this calculator. The approximate yield formula works from the total coupon received in a year, not from how that year's coupon is split into payments. A bond paying 9% annually in one payment and a bond paying 9% in twelve monthly instalments produce the same figure here. In reality, more frequent payouts let you reinvest sooner, which very slightly favours frequent payers, an effect this approximation does not capture.
Results are estimates for guidance only, not investment or tax advice. This is an approximate formula, not the exact IRR, and live yields and prices change daily. Verify every number on the platform before you invest.