Question 1

How does this bond comparison calculator work?

Accepted Answer

Enter the details of two to four bonds (face value, coupon rate, price you would pay per $100 face, maturity, and coupon frequency). The tool computes each bond's yield to maturity from the price you enter, plus effective annual yield, current yield, annual coupon income in dollars, capital gain or loss at maturity, and total return over the holding period. The table is sorted by YTM and the highest-YTM bond is highlighted so you can see the winner at a glance.

Question 2

Why should I rank by YTM instead of coupon rate?

Accepted Answer

The coupon rate is a fixed percentage the bond pays on its face value, but what you actually earn depends on what you paid. A 6.50% coupon bought at $109.94 per $100 face only yields about 2.62% to maturity, because the $9.94 premium is lost when the bond is repaid at face. A 3.5% coupon bought at $98 might yield 4% because you gain $2 back at maturity. YTM captures coupon income and the capital gain or loss at maturity in one number, so ranking by YTM tells you the real return.

Question 3

Can I compare bonds with different maturities?

Accepted Answer

You can, and the tool still shows YTM for each. But different maturities are not a clean apples-to-apples comparison: a longer bond typically yields more because you are being paid to lock your money up longer and to accept more interest-rate risk. Treat the YTM ranking as a starting point when horizons differ, then decide whether the extra yield on the longer bond is worth the extra time exposure.

Question 4

What is the difference between YTM, effective annual yield, and current yield?

Accepted Answer

YTM is the annualized return quoted using the bond's coupon compounding (semi-annual for most Canadian bonds), also called bond-equivalent yield. Effective annual yield restates that same return as if it compounded once a year, which makes it directly comparable to a GIC or an annualized savings rate. Current yield is annual coupon divided by current price; it ignores the capital gain or loss at maturity, so it can be misleading for premium and discount bonds. YTM is the correct ranking metric.

Question 5

What does "clean price" mean and why does the tool use it?

Accepted Answer

The clean price is the price you see quoted on broker screens, before any accrued coupon interest. When you buy mid-period, you actually pay clean price plus accrued interest (the "dirty" price), because you owe the previous holder for the fraction of the coupon they earned. This tool uses your clean-price input and adds accrued interest internally, so you can paste the number the broker shows and get the correct YTM.

Question 6

Should I use the face value column when comparing bonds?

Accepted Answer

Yields and rates (coupon, YTM, effective annual, current yield) are always comparable regardless of face value. The dollar columns (annual income, capital gain, total return) depend on the face value you enter. If you want a direct dollar comparison, set the same face value on every card. Default is $1,000 face, which mirrors how retail bonds are typically quoted in Canada.

Question 7

Are corporate and government bonds ranked the same way?

Accepted Answer

The math is the same, but do not compare YTMs across credit quality without accounting for risk. A 5-year corporate bond at 5.5% and a 5-year Government of Canada bond at 3.5% are not equivalent: the extra 2% on the corporate bond is compensation for credit risk. Compare YTMs within similar credit tiers (Government of Canada vs Government of Canada, single-A corporate vs single-A corporate) for a meaningful ranking.

Bond	Coupon	Price / 100	YTM	Effective annual	Current yield	Annual income	Capital gain/loss	Total return
B	5.50%	$105.00	4.38%	4.42%	5.24%	$55.00	$-50.00	$225.00
A	3.50%	$98.00	3.94%	3.98%	3.57%	$35.00	$20.00	$195.00

Bond Comparison Calculator

ABond A

BBond B

Side-by-side comparison (sorted by yield to maturity)

Coupon rate vs yield to maturity

Frequently Asked Questions