Yield to maturity (YTM) is the total annualised return you'd earn on a bond if you bought it at the current market price and held it to maturity, assuming all coupons are received and reinvested at the YTM. It's the single most-used yardstick for comparing bonds. The approximation in this calculator uses (annual coupon + (face − price)/years) ÷ ((face + price)/2) — accurate to within ±0.1% of the true iteratively-solved YTM for typical inputs.

YTM is inversely related to price: when bond prices fall, YTMs rise (because you're getting more return for less invested), and vice versa. Long-duration bonds are more price-sensitive than short — a 30-year bond loses ~10% of its price for each 1% YTM rise; a 2-year bond loses ~2%. This duration sensitivity matters more than coupon rate for capital values during a rate-cycle.

Australian Treasury fixed bonds pay coupons semi-annually; corporate fixed bonds usually quarterly. Treasury Indexed Bonds (CIBs) have CPI-linked principal and use a different formula (real yield + inflation). Floating-rate notes have a margin over BBSW rather than a fixed YTM. This calculator covers fixed-coupon bonds only.