A callable bond can be repaid early, so its yield depends on when the issuer calls it. Enter the price, coupon, call price and years to call to get the yield to call, compare it with yield to maturity, and find the yield to worst across a whole call schedule.
Last updated:
Bond
$
$
%
Call feature
years
$
Often par plus a small premium.
years
For YTM and yield to worst. Leave empty to skip.
Enter your values to see the result.
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How to use the Yield to Call Calculator
Enter the bond's price, face value and coupon, and choose how often coupons are paid.
Enter the first call date as years from now and the call price the issuer would pay.
Add the years to maturity to compare with YTM, and optionally list more call dates, one per line as years, price.
Press Calculate YTC to see the yield to call, YTM and yield to worst.
Check the tables for the yield at each redemption date and the cash flows to the first call.
How yield to call is calculated
Yield to call treats the call date as if it were the maturity date and the call price as if it were the face value:
C is the coupon per period, n the number of coupon periods until the call, and y the yield per period. The annual YTC is y × coupons per year (the bond-equivalent convention).
A quick approximation is (annual coupon + (call price − price) ÷ years to call) ÷ ((call price + price) ÷ 2).
Example: a 6% semi-annual bond priced at 1,050, callable at 1,020 in 3 years, with 10 years to maturity. Solving gives a yield to call of about 4.82% and a yield to maturity of about 5.35%. Because the bond trades at a premium, an early call reduces the return, so the yield to worst is the YTC.
YTC vs YTM at a glance
Bond bought at
Typical relationship
Which is the yield to worst?
Premium (above call price)
YTC < YTM
Usually the yield to the earliest call
Near the call price
YTC ≈ YTM
Depends on the call premium and timing
Discount (below par)
YTC > YTM
Usually the yield to maturity
Tips for callable bonds
Use the full call schedule. Many bonds can be called on several dates at declining prices. Enter each one to make sure you find the true yield to worst.
Use the clean price. Enter the quoted price without accrued interest; the calculator assumes you are on a coupon date.
Think about reinvestment. If a bond is called, you get your money back when rates are likely lower, so the money may be reinvested at a lower yield.
Frequently asked questions
What is the yield to call formula?
Yield to call is the rate y that solves Price = Σ C ÷ (1 + y)^t + Call price ÷ (1 + y)^n, where C is the coupon per period and n the number of periods until the call date. Like YTM it has no closed form, so it is solved numerically and then multiplied by the coupons per year to give an annual figure.
When is yield to call lower than yield to maturity?
Usually when a bond trades at a premium. The buyer pays more than the call price and loses that premium faster if the bond is called early, so the yield to call is lower. For a bond bought at a discount, an early call returns the money sooner and the yield to call is usually higher than YTM.
What is yield to worst?
Yield to worst is the lowest yield you could receive if the issuer acts in its own interest, taken as the minimum of the yield to maturity and the yields to every possible call date. Brokers commonly quote it for callable bonds because it is the conservative estimate.
Why do issuers call bonds?
Issuers usually call bonds when interest rates have fallen, so they can refinance at a lower cost. That is exactly when investors would like to keep the higher coupon, which is why callable bonds pay higher yields than similar non-callable bonds.
What is a call premium?
The call premium is the amount above face value the issuer must pay to redeem the bond early, for example 1,020 on a 1,000 bond. Premiums often step down over time until the bond is callable at par.
Does the calculator handle make-whole calls?
Not directly. A make-whole call price is based on Treasury yields at the time of the call, so it is not known in advance. Such calls are rarely exercised, and investors normally look at yield to maturity for those bonds.
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