Question 1

What is current yield vs yield to maturity?

Accepted Answer

Current yield is simply the annual coupon divided by the current price. Yield to maturity (YTM) accounts for both coupon payments and the gain or loss when the bond matures at face value, giving a more complete picture of total return.

Question 2

What does it mean when a bond trades at a premium or discount?

Accepted Answer

A bond trades at a premium (above face value) when its coupon rate exceeds market rates. It trades at a discount (below face value) when market rates are higher. At maturity, the bond pays back its face value regardless.

Question 3

How do interest rates affect bond prices?

Accepted Answer

Bond prices and interest rates move inversely. When rates rise, existing bonds with lower coupons become less attractive, so prices fall. When rates drop, existing bonds with higher coupons become more valuable.

Bond Yield Calculator

Inputs

Results

Total Return Breakdown

Frequently Asked Questions

Related Calculators

Compound Interest Calculator

Present Value Calculator