How this number is made
Exact yield to maturity needs a solver. This page uses the standard approximation: the coupon, plus the annualized discount or premium, divided by the average of price and face. Current yield, which ignores the discount, is shown beside it.
- Price is what you pay now, not the face.
- Years left are until the face is paid back.
Formula
Approximate yield = (coupon + (face − price) ÷ years) ÷ ((face + price) ÷ 2). Current yield = coupon ÷ price.
Worked example
With the figures already in the form, approximate yield to maturity is 4.59%.
Questions
How far off is the approximation?
Close for bonds near par and for moderate terms. Further off for deep discounts and long terms. Treat it as a comparison tool.
Is this after tax?
No. The after-tax yield page applies a tax rate to a yield you already have.