Yield to Call (YTC)

Bonds & Fixed Income
Updated Apr 2026 • Has calculator

The annualised return an investor earns if a callable bond is called by the issuer on the first call date.

What is Yield to Call?

Yield to call is calculated identically to YTM except the call price replaces the face value and the years to the first call date replace the years to maturity. Callable bonds give the issuer the right to redeem the bond before maturity, typically when interest rates fall and the issuer can refinance at a lower cost. YTC is most relevant when a bond is trading at a premium, because a call would cut short the investor's above-market coupon stream. Investors in callable bonds should compare YTM and YTC and use the lower of the two — the yield to worst — as the conservative return estimate.

Formula

Price = Σ [Coupon / (1 + YTC/freq)ᵗ] + CallPrice / (1 + YTC/freq)ⁿ

Worked Example

Worked example — Ford Motor Company Callable Bond (Hypothetical)

Secondary market analysis

Step 1  Current price: $1,050 | Annual coupon: $70 (7% coupon rate)
Step 2  Call price: $1,050 | Years to first call: 5 | Semi-annual coupons
Step 3  Solve for r: $1,050 = Σ $35/(1+r)^t + $1,050/(1+r)^10
Step 4  YTC ≈ 6.67% (annualised)
Step 5  → YTC < YTM because bond may be called before investors recoup premium

Source: CFA Institute — Fixed Income Analysis, 3rd ed., Ch. 3 (2023-01-01)

Calculate Yield to Call

Current clean market price of the bond

Total annual coupon payment in dollars

Par value of the bond

Price at which the issuer may call the bond

Years from today until the first possible call date

1 = annual, 2 = semi-annual

Yield to Call

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Not investment advice.

How to Interpret Yield to Call

< 3
< 3%: Low — possible if callable bond trades well above par
3 – 6
3–6%: Moderate — typical investment-grade callable bond range
6 – 9
6–9%: High yield — below-investment-grade callable territory
> 9
> 9%: Very high — distressed or speculative-grade callable bond

📚 Bond Basics — Complete the path

  1. Bond Price
  2. Coupon Payment
  3. Yield to Maturity
  4. Yield to Call
  5. Bond Equivalent Yield
Sources
  1. CFA Institute — Fixed Income Analysis, 3rd ed., Ch. 3
  2. Investopedia — Yield to Call (YTC)