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Applications
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Bond Yield
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This calculation finds the yield-to-maturity (in percent) of a bond when the purchase date, maturity date, coupon rate and price (percentage) are known. (See Appendix D for accuracy specifications.) The formula uses the constant storage location, therefore, any value stored there will be destroyed when the final key (the one that triggers the result) is pressed. Information is entered as follows:
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 1 |
Enter settlement date (1- or 2-numeral month, decimal point, 2-numeral day, 4-numeral year), press SAVE .
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| 2 |
Enter maturity date (according to above convention), press DAY.
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| 3 |
Enter annual coupon rate, press PMT.
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Enter price (present value) of the bond, press PV.
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Enter , then i (YTM) to obtain the effective annual yield-to-maturity.
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Sample Case: What is the yield-to-maturity of a bond purchased
January 23, 1973 at a price of 106, that matures March 6, 1978 and has a
coupon rate of 4½ %?
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Solution
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| | Enter: | | | See Displayed: | | |
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1.231973 SAVE 3.061978 DAY
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% effective annual yield-to-maturity
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The following calculation finds the yield-to-maturity of a bond when
prices are obtained from the basis book, or when prices are computed in a
manner compatible with basis book computations. It is assumed that
time-to-maturity (in years, months and days) is known, as well as the coupon rate and price (present value).
The constant storage location is used with this calculation also; any
value stored there will be destroyed when the final key (the one that triggers the result) is pressed.
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Information is entered as follows:
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| 1 |
Enter number of days (if none, enter 0), press SAVE .
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| 2 |
Enter 30 (days/mo), press ÷.
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| 3 |
Enter number of months (if none, enter 0), press +.
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| 4 |
Enter 12 (mo/yr), press ÷.
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| 5 |
Enter number of years (if none, enter 0), press +.
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| 6 |
Enter 365, press × n.
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