Yield to Call Calculator

How it is calculated

The tool uses the standard shortcut estimate, not an exact internal rate of return. Face value, current price and call price are all in the same currency amounts, the coupon rate is a percentage and years is the time to the call date:

annual coupon = face × coupon rate ÷ 100
YTC ≈ [coupon + (call price − price) ÷ years] ÷ [(call price + price) ÷ 2]

The numerator is the average yearly income: the coupon plus the gain (or loss) spread evenly over the years until the call. The denominator is the average of what you pay and what you receive. The tool also shows the annual coupon and the call premium over par (call price − face), which prints as a negative amount such as -$50.00 when the call price is below face. It does not compound, discount cash flows or split coupons into half-yearly payments, so a financial calculator will give a slightly different number. Face, price, call price and years must be above zero, years can be at most 100, the coupon rate must be between 0 and 100, and a price or call price above ten times the face value is treated as a typo and shows no result.

Common mistakes

• Entering the price as a percentage of par (103) while the face is 1,000. The tool does not convert it, so price, call price and face must all be actual amounts; mixing them gives absurd results such as 58.333%.
• Entering the coupon as a decimal. The field is a percentage, so type 6 for 6%; typing 0.06 gives a coupon of $0.60 and a tiny yield.
• Using years to maturity instead of years to the call date. YTC measures the return if the bond is redeemed at the call, so use the time until that date.
• Comparing this estimate with a yield quoted to the cent by a broker. The shortcut ignores compounding and semi-annual coupons, so a small difference is normal.
• Reading a negative call premium as an error. If the call price is below face, for example 950 on a 1,000 bond, the premium shows -$50.00 and the yield is lower because you would lose money on the call.