Yield to Worst Calculator
Find a callable bond’s yield to worst — the lower of its yield to maturity and yield to call — from price, coupon, maturity, call date and call price, with current yield and which scenario is worst.
How it works
Price = Σ coupon ÷ (1 + y/f)^k + redemption ÷ (1 + y/f)^n · solve for y with redemption = face at maturity (YTM) and = call price at the call date (YTC) · yield to worst = min(YTM, YTC)
A callable bond can be redeemed early by the issuer, which usually happens when rates fall — exactly when the bond is worth most to you. Yield to worst is the lowest yield you can receive if the issuer acts in its own interest and no default occurs; brokers are required to quote it under FINRA rules for callable bonds. Premium bonds are usually “worst” at the call date, discount bonds at maturity. With several call dates, compute the yield to each and take the lowest; yields here are bond-equivalent (periodic yield × payments per year).
Worked example
A 10-year, 5% semi-annual bond priced at 1,050 with a call in 5 years at 1,020 has a yield to maturity of 4.377% and a yield to call of 4.243%. The yield to worst is therefore 4.243%, reached if the bond is called. Its current yield is 50 ÷ 1,050 = 4.762%.
Sources: FINRA — Understanding bond yield and return · Investopedia — Yield to Worst (YTW)
Frequently asked questions
What is yield to worst?
The lowest of a bond’s yield to maturity and its yields to every possible call (or put) date. It is the most conservative yield you can expect without a default.
When is yield to call lower than yield to maturity?
Usually when the bond trades at a premium: being called early at or near par means you lose the premium over fewer years, which lowers the yield.
Why do brokers quote yield to worst?
For callable bonds the worst-case yield is the honest number. US rules (MSRB and FINRA) require confirmations of callable bonds to show the lower of yield to call and yield to maturity.
Is the clean or dirty price used?
Yields are normally calculated from the clean price on a coupon date. Between coupon dates add accrued interest to get the invoice price you actually pay.
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Educational estimate, not investment, trading or tax advice. Brokers, issuers and data providers use their own conventions, fees and figures — confirm with your broker, the issuer’s documents or a licensed adviser before acting.