How Is a Gilt's Yield Calculated?
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Yield to maturity solves for the discount rate that equates a gilt’s dirty price to its remaining cash flows.
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How Is a Gilt's Yield Calculated — the mechanics
The coupon is an input, not the answer. YTM is the internal rate of return if you collect every remaining coupon and par, and if you can reinvest coupons at that same rate — an assumption, not a promise.
Gilt YTM is found by solving the present-value equation of remaining coupons plus principal equals dirty price. UK practice uses the gilt compounding convention (semi-annual). A spreadsheet IRR on annual coupons will not match the screen.
Our calculator is an equal-period teaching model. It ignores some gilt day-count corners. For an order, use the yield your broker shows on that ISIN.
A 0.01% (one basis point) on a 10-year is a small money amount per £100; on a pension fund’s billions it is not small. Retail tickets should still quote YTM to two decimals, not three, unless you are matching a GEMM.
Official sources (UK Gilts)
Primary statistics and prospectuses for UK Gilts are published by the issuer, not by this newsroom. The labelled links at the end of this page go to those official sites (DMO, TreasuryDirect, Finanzagentur, MEF, AFT, SNB or ECB as relevant).
Our live board is a teaching overlay: dated prints, named sources, estimated ISIN lines. It is not a replacement for the issuer’s calendar.
Vigtige pointer
- Gilt YTM is found by solving the present-value equation of remaining coupons plus principal equals dirty price.
- Prices and yields change. When this site quotes them, it dates them on the live board.
- Credit of a G7 government in its own currency is not the same as a stable screen price, and not the same as a bank deposit.
FAQ
- Is running yield the same as YTM?
- No. Running yield is coupon divided by price. YTM also accounts for the gain or loss to par at maturity.