Free tool
Work out a bond's current yield and an approximate yield to maturity from its price, coupon and time to maturity, and convert a tax-free yield into its tax-equivalent yield.
Built for Series 7 and securities exam prepEnter the face value, price, coupon and years to maturity.
Yield calculations are a staple of securities licensing study. Encodr turns the formulas into spaced-repetition practice so they hold until exam day.
Get started freeCurrent yield is the annual coupon divided by the current market price. A $1,000 bond with a 5% coupon pays $50 a year; at a price of $950 the current yield is 50 / 950 = 5.26%.
Yield to maturity (approximation). The shortcut formula is
(annual coupon + (face - price) / years) / ((face + price) / 2). For the same bond over 10 years:
(50 + 5) / 975 = 5.64%. This is an approximation; a true yield to maturity is found by solving for the rate that
discounts every remaining cash flow to the price, and it will differ slightly.
Tax-equivalent yield is tax-free yield / (1 - tax rate). A 4% tax-free yield for
someone in the 32% bracket is 4 / 0.68 = 5.88%, the taxable yield needed to match it after tax.
A bond priced below face trades at a discount, so its yield to maturity is higher than its coupon rate; above face is a premium, and the reverse holds. This calculator is for study and does not account for accrued interest, call features, day counts or taxes on gains, and it is not investment advice.
Related prep: the FINRA Series 7 course page (the course is in the works) and Series 7 vs SIE.
The FINRA Series 7 content outline by job function with item counts, and what that split means for how to study.
Long and short calls and puts, covered calls, protective puts and straddles: maximum gain, maximum loss and breakeven, with worked examples.
How the FINRA SIE and the Series 7 differ in length, passing score, sponsorship and purpose, and how the two fit together.
Real vs nominal values explained with the formulas: compute inflation from an index, convert nominal dollars to real dollars and find the real interest rate.
See whether a property policy met its coinsurance requirement and exactly what it pays on a loss - built for P&C license exam prep.
Open tool →Split a medical bill between you and the plan through the deductible, coinsurance, copay, and out-of-pocket maximum, step by step.
Open tool →Split a real estate commission between the listing and buyer brokerages, then between each broker and agent, with the math shown.
Open tool →Prorate annual property taxes at closing on a 360 or 365-day year, with the day count and the seller's share credited to the buyer.
Open tool →Profit or loss, breakeven, maximum gain and maximum loss for a long or short call or put at expiration - built for FINRA SIE exam prep.
Open tool →Public offering price, shares bought, front-end load, your own breakpoint schedule and a back-end CDSC by year - built for FINRA SIE exam prep.
Open tool →