Yield to Call Calculator

Formula

To calculate the yield to call:

\[ \text{YTC} = \left( \frac{C + \frac{FV - P}{YTC}}{\frac{FV + P}{2}} \right) \times 100 \]

Where:

$\text{YTC}$ is the Yield to Call (%)
$\text{FV}$ is the Face Value ($)
$\text{C}$ is the Annual Coupon Payment ($)
$\text{P}$ is the Current Bond Price ($)
$\text{YTC}$ is the Years to Call

What is Yield to Call?

Yield to Call refers to the expected rate of return an investor will receive if they hold a callable bond until the issuer exercises its right to call or redeem the bond before its scheduled maturity date. It helps investors evaluate the potential return and risks associated with callable bonds.

Example Calculation 1

Let's assume the following values:

Face Value ($\text{FV}$) = $1000
Annual Coupon Payment ($\text{C}$) = $50
Current Bond Price ($\text{P}$) = $950
Years to Call ($\text{YTC}$) = 5

Using the formula:

\[ \text{YTC} = \left( \frac{50 + \frac{1000 - 950}{5}}{\frac{1000 + 950}{2}} \right) \times 100 \approx 5.74\% \]

The Yield to Call is approximately 5.74%.

Example Calculation 2

Let's assume the following values:

Face Value ($\text{FV}$) = $1000
Annual Coupon Payment ($\text{C}$) = $60
Current Bond Price ($\text{P}$) = $980
Years to Call ($\text{YTC}$) = 10

Using the formula:

\[ \text{YTC} = \left( \frac{60 + \frac{1000 - 980}{10}}{\frac{1000 + 980}{2}} \right) \times 100 \approx 6.10\% \]

The Yield to Call is approximately 6.10%.