Yield to Maturity Calculator
Answers the Question
How much will an investment earn?
Calculator for Yield to Maturity
What Is the Yield to Maturity?
This formula provides an estimate of how well a bond or other fixed investment will provide income to whomever possesses it.
Some people may refer to it by other names including:
- book yield
- redemption yield
Why Is it Important?
- The main reason to purchase bonds is to guarantee a certain return. This formula estimates the return so that investors can decide whether or not it is worth purchasing.
Formula(s) to Calculate Yield to Maturity
- YIELD TO MATURITY = ( INTEREST PAYMENT + ( FACE VALUE - PRICE ) / YEARS TO MATURITY) / ((FACE VALUE + PRICE ) / 2)
- Not considering that some bonds are not held to maturity. If a bond will be sold in the future, the prevailing interest rates will affect the price buyers are willing to pay.