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Bond Yield to Call

Calculate yield to call for callable bonds.

Bond Price ($)

Call Price ($)

Annual Coupon Payment ($)

Years to Call

Yield to Call Results

Yield to Call:

Current Yield:

Capital Gain/Loss:

Total Interest:

Total Return:

YTC Formula

YTC = (C + (CP - P) / n) / ((CP + P) / 2)

Where:
C = Annual coupon payment
CP = Call price
P = Current bond price
n = Number of years to call

This is an approximation formula. The actual YTC requires solving for the discount rate that makes the present value of future cash flows equal to the bond price.

Key Concepts

Callable Bond

A bond that can be redeemed by the issuer before maturity at a specified call price.

Call Price

The price at which the issuer can call back the bond, typically at a premium to face value.

Call Protection

Period during which the bond cannot be called, protecting investors from early redemption.

Call Risk

Risk that bonds will be called when interest rates fall, forcing reinvestment at lower rates.

Usage Tips

Use YTC when evaluating callable bonds that trade at a premium
Compare YTC with yield to maturity to assess call likelihood
Consider call protection periods when investing
Factor in reinvestment risk for callable bonds
Review call schedules and provisions in bond prospectus

Example Calculation

Corporate Bond Example:

• Current Price: $1,080
• Call Price: $1,050
• Annual Coupon: $60
• Years to Call: 3

YTC Calculation:
YTC = ($60 + ($1,050 - $1,080) / 3) / (($1,050 + $1,080) / 2)
YTC = ($60 - $10) / $1,065 = 4.69%