Yield to Call

[yeeld tuh kawl]

What is the definition of Yield to Call?

The return on a bond calculated by assuming the bond will be redeemed by the issuer at the earliest call date specified in the indenture agreement.

Using Yield to Call in an Example

Consider a bond with a face value of $1,000, a coupon rate of 5%, and a call option available in five years at a call price of $1,050. If the bond is called at the first opportunity, the yield to call would reflect the return the investor receives from the coupon payments plus the call premium over the five-year period.

Using Yield to Call in a sentence

Our financial advisor calculated the yield to call on those municipal bonds to determine if they're a better investment compared to others that only offer yield to maturity.

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Yield

The income return on an investment, such as dividends or interest, expressed as a percentage of the investment's cost or current market value.

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Yield Curve

A graph that illustrates the relationship between interest rates and the maturities of debt securities of the same credit quality, showing how these rates vary with different maturity dates.

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Yield to Maturity

The total return anticipated on a bond if the bond is held until its maturity date, considering all payments of principal and interest, adjusted for any premium or discount to the face value of the bond.

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