There are two deviations from the standard formula: The formula below shows the relationship between the bond's price in the secondary market (excluding accrued interest) and its yield to maturity, or other yields, depending on the maturity date chosen. The formula and steps to calculate yield to call are exactly the same as how we calculate yield to maturity, i.e., you calculate the discount rate that makes the present value of the future bond payments (coupons and par) equal to the market price of the bond plus any accrued interest. For example, you buy a bond with a $1,000 face value and 8% coupon for $900. It is a date after the security is traded to the buyer that is after the issue date. Callable bonds generally offer a slightly higher yield to maturity. It is highest at the start of call period and approaches the yield to maturity as the bond nears its maturity date. When its yield to call is calculated, the yield is 3.65%. Yield to call can be mathematically derived and calculated from the formula. Yield to Call is a finance function or method used in the context of stock market, often abbreviated as YTC, represents the return from callable bond before its maturity, whereas, the YTM - Yield to Maturity represents the rate of return percentage, if the bond is held until its maturity in the stock market.. Formula to calculate Yield to Call (YTC) Assume a bond is maturing in 10 years and its yield to maturity is 3.75%. The Formula Relating a Bond's Price to its Yield to Maturity, Yield to Call, or Yield to Put. Divide by the number of years to convert to an annual rate. Formula = YIELD(settlement, maturity, rate, pr, redemption, frequency, [basis]) This function uses the following arguments: Settlement (required argument) – This is the settlement date of the security. The bond has a call provision that allows the issuer to call the bond away in five years. A callable bond can be valued by discounting its coupon payments and call price using the following formula: Finally, add the two types of yield -- interest rate and bond price -- for each of the possible call dates as well as the maturity dates. How to calculate the yield to call on a callable bond using Excel and the Texas Instruments BAII calculator. Yield to call is the price that will be paid if the issuer of a callable bond opts to pay it off early. Calculating Yield to Call Example. ...then yield to call is the appropriate figure to use. Yield to call refers to earnings from callable bonds, where the issuing company or agency can call the bond, essentially paying it back early with less interest, usually saving itself money. (Recorded with http://screencast-o-matic.com) Yield on a callable bond is called yield to call which varies with time. 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