Yield to Maturity

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Uploaded by on Aug 6, 2009

An example of calculating Yield-to-Maturity using the 5-key approach.

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Education

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Uploader Comments (kevinbracker)

  • where does it say semi annually on the paper in front of him? can someone answer me this question please because i just don't get it! I'm going crazy!!!

    A two-year bond with a 10% coupon paid annually and face value of £1,000 is being traded at £949.47. Calculate the YTM.

  • @TolgahanKuce Bonds typically pay interest semi-annually so I assume this for all problems done in my class. If your bond pays interest annually, just keep your periods per year at 1, set the N = 2 and the coupon annual (PMT = 100).

  • How do we know something is a cash outflow and therefore making the PV negative?

  • @DudeDesi07 You have to buy the bond (making the current price you pay today -- PV -- a cash outflow). In exchange for buying the bond today, you receive the coupon payment and par value (making them cash inflows). Cash outflows are negative, cash inflows are positive. As for the $1000 Future Value, look down the comments page a couple spots...its addressed below.

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  • @kosmosleha in other words, you are getting 35bucks every period and at the end of the 20 years you get your 1000 back :)

  • @DudeDesi07 usual bonds are $1000

  • @barca2610 Yes you can...although I don't do homework requests. The selling price is a % of par and even though they are giving the full bond issue, you can still do it on a per-bond basis.

  • great example thanks

  • @kevinbracker . Thanks man, you save me so much time in my finance class at univeristy. You are the man, more people need to post videos likes these !!

  • How did you get 1,000 for FV?

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