Bond Calculator: Is This Bond Worth Buying?

Bonds are one of the most widely held but least understood investments. A bond's listed coupon rate tells you what it pays relative to face value — but yield to maturity (YTM) is what you actually earn if you buy it today at market price and hold it until maturity. When a bond trades at a discount (below face value), YTM is higher than the coupon rate. When it trades at a premium (above face value), YTM is lower. This gap between coupon rate and YTM is the critical insight most bond buyers miss. This calculator computes yield to maturity using the standard approximation formula, current yield (annual coupon ÷ current price), total return (all coupon payments plus principal), and the break-even comparison against alternative investments. It also shows the interest rate sensitivity: how much your bond's price would change if interest rates rise or fall by 1%. Duration — a bond's sensitivity to interest rate changes — is one of the most important risk metrics for bond investors. A bond with a 7-year duration loses approximately 7% of its value for every 1% rise in interest rates. In a rising rate environment, understanding duration helps you manage the risk of holding long-term bonds that decline in price before maturity. Whether you're evaluating a corporate bond, Treasury, or municipal bond (which may offer tax-exempt income), the calculator gives you the comparable after-tax yield to make honest comparisons.