Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Explain Yield to Maturity (YTM), its calculation, and the procedure used to value bonds that pay interest semiannually

Explain Yield to Maturity (YTM), its calculation, and the procedure used to value bonds that pay interest semiannually

Finance

Explain Yield to Maturity (YTM), its calculation, and the procedure used to value bonds that pay interest semiannually.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

YTM i.e yield to maturity is total return that is expected from the bond if bond is held till matuiry. YTM is long term yiel but it is expressed as annula percentage. YTM is calculated as below

YTM = Interest + (Face value - Market selling price)/n / ( Face value + Market selling price)/2

Here Interest = Face value x coupon rate

n = no. of coupon payments

When interest is paid semiannually , than no of time interest paid is doubled , hence n is multiplied by 2 and coupon rate is dividend by 2, rest formula remains the same