Yield to Call (YTC) Calculator
Calculate the yield to call on a callable bond.
Enter face value, coupon rate, call price, years to call, and current price to find the YTC.
Yield to Call (YTC)
Many bonds include a call provision that allows the issuer to redeem the bond before maturity at a specified call price. The Yield to Call is the annualized return you would earn if the bond is called on its first call date.
Why YTC matters: When interest rates fall, issuers typically call their bonds and reissue at lower rates. If you buy a callable bond at a premium expecting to hold to maturity, you may be disappointed — the call happens earlier and at a lower effective yield.
How YTC is calculated:
YTC is the discount rate r that makes:
Price = Σ [Coupon / (1+r)^t] + Call Price / (1+r)^n
Where n = number of periods to the call date. Since this has no closed form, it is solved iteratively.
A commonly used approximation:
YTC ≈ (Annual Coupon + (Call Price - Price) / Years to Call) / ((Call Price + Price) / 2)
Key variables:
| Variable | Meaning |
|---|---|
| Face Value | Par value of the bond (typically $1,000) |
| Coupon Rate | Annual interest rate printed on the bond |
| Call Price | Price the issuer pays to redeem early (often 101–103% of par) |
| Years to Call | Time until the first call date |
| Current Price | Market price you pay today |
YTC vs YTM:
- YTM assumes the bond is held to maturity
- YTC assumes the bond is called on the first call date
- For bonds trading at a premium, YTC is typically lower than YTM
- The yield you should focus on: whichever is lower (Yield to Worst)
Always compare YTM and YTC — the lower one (Yield to Worst) is what you should actually expect.