The Yield to Maturity (YTM) Formula You can use the following formula to calculate the yield to maturity on a bond. This formula factors in the approximate appreciation when a bond is purchased at a discount or at a premium: Yield to Maturity (YTM) 1 + Il FV-CVVN) (FV + CVV2 where: 1 Interest paid annually in dollars = Face value CV = Current value N = Number of years until maturity Example: Calculate the Yield to Maturity (YTM) Suppose you paid $960 for a 10-year bond with a face value of $1,000 and a coupon rate of 4.5%. In this case, the bond was purchased at a discount , which means that the YTM should be higher than the stated coupon rate. This bond pays $ in interest per year. %. (Note: Do not round intermediate calculations. Round Using the provided yield to maturity (YTM) formula, the YTM for this bond is your final answer to two decimal places.)