what is yield to call 
yield to call ytc is the return that a bondholder will be paid if the bond is held until the call date which will occur sometime before the bond reaches maturity yield to call applies to callable bonds a type of bond that allows the investor to redeem the bond or the bond issuer to repurchase it on the call date at a price known as the call price by definition the call date of a bond occurs before the maturity date this number can be mathematically calculated as the compound interest rate at which the present value of a bond s future coupon payments and call price is equal to the current market price of the bond generally speaking bonds are callable over several years they are normally called at a slight premium above their face value though the exact call price is based on prevailing market rates understanding yield to callmany bonds are callable including municipal bonds and bonds issued by corporations if interest rates fall the company or municipality that issued the bond might opt to pay off the outstanding debt and get new financing at a lower cost 1calculating the yield to call on such bonds is important because it reveals the rate of return the investor will receive assuming the yield to call is widely deemed to be a more accurate estimate of expected return on a bond than the yield to maturity calculating yield to callalthough the formula used to calculate the yield to call is quite straightforward 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 