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# YTC Calculator Online

The YTC (Yield to Call) Calculator is a powerful financial tool designed to help investors evaluate the potential return on investment for callable bonds. Callable bonds give issuers the option to repurchase the bonds from investors before the maturity date. The YTC Calculator assists investors in determining the yield they would receive if the issuer decides to call back the bond before its maturity.

## Formula of YTC Calculator

The formula for calculating Yield to Call (YTC) is as follows:

where:

• YTC = Yield to Call
• i = Annual coupon payment (interest payment)
• Pc = Call price of the bond (price at which issuer can repurchase)
• Pm = Current market price of the bond
• n = Number of years until the call date

Now let’s delve deeper into how the YTC Calculator works and how it can benefit investors.

## General Terms Table

Note: This table is for informational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making investment decisions.

## Example of YTC Calculator

Let’s consider an example to illustrate how the YTC Calculator works:

Suppose you have a callable bond with an annual coupon payment (C) of \$50, a call price (Pc) of \$1,100, a current market price (Pm) of \$1,000, and 5 years until the call date (n). Using the YTC formula:

YTC = (50 + 1100 – 1000) / 1000 / 5 = (1150) / 1000 / 5 = 0.23 or 23%

So, the Yield to Call for this bond is 23%.

## Most Common FAQs

Q: Why is YTC important for investors?

A: Yield to Call helps investors assess the potential return on investment if the issuer decides to call back the bond before its maturity. It allows investors to make informed decisions about their bond investments and optimize their portfolio for better returns.

Q: Can YTC be higher than the bond’s coupon rate?

A: Yes, YTC can be higher than the bond’s coupon rate, especially if the bond is trading at a premium in the market. This occurs when the bond’s call price is higher than its current market price, resulting in a higher yield to call for investors.