Yield to Call Calculator

Yield to call (YTC) is the annualized return if the bond is called at the earliest possible date. It accounts for coupon payments received until the call date and the call price received at redemption.

YTM assumes the bond is held to maturity. YTC assumes it is called early. YTC uses the call price and years to call instead of face value and years to maturity.

Yield to worst is the lower of YTC and YTM (or the lowest yield across multiple call dates). It represents the most conservative expected return and is the industry standard for evaluating callable bonds.

Issuers call bonds when interest rates fall significantly below the coupon rate, allowing them to issue new bonds at lower rates and reduce interest costs. This is similar to refinancing a mortgage.

The call premium is the amount above face value that the issuer pays when calling the bond. For example, a bond callable at $1,030 has a $30 call premium per $1,000 face value.

Call risk means your high-coupon bond may be redeemed early, forcing you to reinvest at lower prevailing rates. Callable bonds typically offer higher yields than non-callable bonds to compensate for this risk.

Use YTC when the bond trades at a premium (above face value) and rates have dropped — calling is likely. Use YTM when the bond trades at a discount — the issuer has no incentive to call.

Most callable bonds have a call protection period (e.g., 5-10 years after issuance) during which they cannot be called. After that, the issuer can call on specified dates, often with a declining call premium.

US Treasury bonds issued since 1985 are not callable. However, some older Treasury bonds (issued before 1985) with 30-year maturities are callable 5 years before maturity.