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Yield to Call (YTC)

Yield assuming the bond is called (redeemed early) at a specific call date and price.

YTC is the yield an investor would earn if the issuer exercises its call option — redeeming the bond before maturity at a predetermined price (usually par or a small premium). Calculation: Solve for the discount rate that equates the present value of cash flows up to the call date (plus the call price) to the market price. YTC is lower than YTM when the bond trades at a premium (issuer is incentivized to call). Yield to Worst (YTW) = min(YTM, all YTCs) — the most conservative yield scenario. Bloomberg YAS prominently displays YTW for callable bonds.

Formula
P=∑t=1TcallC(1+YTC)t+Call Price(1+YTC)TcallP = \sum_{t=1}^{T_{call}} \frac{C}{(1+\text{YTC})^t} + \frac{\text{Call Price}}{(1+\text{YTC})^{T_{call}}}