The yield to maturity is the rate of return or discount rate of a bond. In our example, we know that the par value is £950, the coupon rate is 6%, there are 5 years to maturity and the bond’s price is £1,100. One way to calculate the the YTM is to use an approximation. Another way is through trial and error. However, what we want to do is to find the exact value of the yield to maturity without any manual effort. We show how this can be done using Excel's RATE function.
Calculate The YTM Of A Bond With Semi Annual Coupon Payments In Excel:
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[email protected]Overview: (0:00)
Calculate Annual Coupon: (0:35)
Find Yield To Maturity: (0:57)
Check YTM is correct: (2:12)