What is 'Yield To Call'
Yield to call is the yield of a bond or note if you were to buy and hold the security until the call date, but this yield is valid only if the security is called prior to maturity. The calculation of yield to call is based on the coupon rate, the length of time to the call date and the market price. Generally speaking, bonds are callable over several years and are normally called at a slight premium.
BREAKING DOWN 'Yield To Call'
Many bonds are callable, especially those issued by corporations. This means that the issuer of the bond can redeem the bond on what is known as the call date, at a price known as the call price. The call date of a bond is always before the maturity date. Calculating the yield to call on a bond is important because it reveals what rate of return the investor will receive assuming that the bond is called on the earliest possible date, the bond is purchased at the current market price, and the bond is held until the call date.
YieldToCall Calculation Example
The formula to calculate the yieldtocall looks slightly complicated, but it is actually quite straightforward. The components of the formula are as follows:
P = the current market price
C = the annual coupon payment
CP = the call price
t = the number of years remaining until the call date
YTC = the yield to call
The complete formula to calculate yield to call is:
P = (C / 2) x {(1  (1 + YTC / 2) ^ 2t) / (YTC / 2)} + (CP / (1 + YTC / 2) ^ 2t)
Based on this formula, the yield to call cannot be solved for directly. An iterative process must be used to find the yield to call if doing the calculation by hand. But many computer software programs have a "solve for" function that will calculate the value with the click of a button.
As an example, consider a callable bond that has a face value of $1,000 and pays a semiannual coupon of 10%. The bond is currently priced at $1,175 and has the option to be called at $1,100 five years from now. Note that the remaining years until maturity does not matter for this calculation.
Using the above formula, the calculation would be set up as:
$1,175 = ($100 / 2) x {(1 (1 + YTC / 2) ^ 2(5)) / (YTC / 2)} + ($1,100 / (1 + YTC / 2) ^ 2(5))
Through an iterative process, it can be determined that the yield to call on this bond is 7.43%.

Call Date
The call date is the date on which a bond can be redeemed before ... 
American Callable Bond
An American Callable Bond can be redeemed by the issuer at any ... 
Conditional Call Option
A conditional call option requires a bond's issuer to replace ... 
Yield To Maturity (YTM)
Yield to maturity (YTM) is the total return expected on a bond ... 
Hard Call Protection
Hard call protection is the period in the life of a callable ... 
Rate Trigger
A rate trigger is a drop in interest rates significant enough ...

Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Investing
4 basic things to know about bonds
Learn the basic lingo of bonds to unveil familiar market dynamics and open to the door to becoming a competent bond investor. 
Investing
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing
Callable Bonds: Leading a Double Life
Learn the difference between a normal bond and a callable bond. Discover five things you must know before investing and why callable bond lives a doublelife that contains so much risks. 
Investing
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Investing
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Investing
Corporate Bonds: Advantages and Disadvantages
Corporate bonds have advantages and disadvantages. They can provide compelling returns, even in lowyield environments. But they are not without risk. 
Investing
Find the Right Bond at the Right Time
Learn about the types of bonds you should consider investing in, when you should be buying them and how to compare yields against their time to maturity.

What is the difference between yield to maturity and the yield to call?
Determining various the various yields that callable bonds can provide investors is an important factor in the bond purchasing ... Read Answer >> 
Current yield vs yield to maturity
Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >> 
How do I use the holding period return yield to evaluate my bond portfolio?
Find out how to use the holding period return yield formula to evaluate the performance of bonds in your portfolio, and view ... Read Answer >> 
How do I calculate yield to maturity of a zerocoupon bond?
Find out how to calculate the yield to maturity of a zerocoupon bond, and learn why this calculation is simpler than one ... Read Answer >> 
What does a negative bond yield mean?
Learn what it means when a bond has a negative yield and what circumstances must arise for the yield to be negative when ... Read Answer >> 
What causes a bond's price to rise?
Should you invest into bonds? Learn about factors that influence the price of a bond, such as interest rates, credit ratings, ... Read Answer >>