How it's calculated
Price = Σ C ÷ (1+y)ᵗ + F ÷ (1+y)ⁿ
Price = market price, C = coupon per period, F = face value, n = number of periods, y = periodic yield (solved numerically by Newton iteration). YTM = y × periods per year; current yield = annual coupon ÷ price.
Common questions
What is yield to maturity?
YTM is the total annual return you earn if you hold a bond to maturity and reinvest its coupons at the same rate.
Why is YTM different from the coupon rate?
The coupon rate is fixed against face value, but YTM also accounts for whether you bought the bond above or below par.