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Reinvested Coupon Effective Annual Yield Calculator

Calculate a coupon rate from annual cash and face value, then model its effective yield with periodic reinvestment.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

Annual coupon cash of 100 on a face value of 1,000 is a 10% coupon rate. Reinvesting semiannual coupons at that same periodic rate gives a modeled annual yield of 10.25%.

Coupon rate = annual coupon cash ÷ face value; effective yield = (1 + coupon rate/n)^n − 1

Worked example

Enter these known values and leave the other values blank.

Bond face value
1000 USD
Total annual coupon cash
100 USD
Coupon and reinvestment frequency
Semi-annually
Nominal coupon rate
10 %
Modeled effective annual yield
10.25 %

Assumptions and limitations

  • Assumes every coupon can be reinvested at the same periodic coupon rate. Real reinvestment rates can differ. Weekly and daily choices use 52 and 365 periods per year.
  • This is not yield to maturity or current yield. It uses face value and omits market price, redemption gains or losses, calls, fees, taxes and default risk.
  • Face value must be positive. Coupon cash, coupon rate and the modeled yield must be nonnegative.

Common questions

Why is this different from current yield?

Current yield divides annual coupon cash by market price. This model starts with face value and compounds the coupon rate under a reinvestment assumption.

Does the calculation guarantee reinvestment income?

No. The yield follows from the supplied rate and the assumption that each payment earns the same periodic rate after reinvestment.

References

Bookify adds explicit model-domain checks: Face value must be positive. Annual coupon cash cannot be negative. The coupon rate cannot be negative. This coupon model uses a nonnegative effective yield.

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