Yield to maturity is an assumptions-based formula, which means it’s prone to error, volatility and other unpredicted situations. For example, the bond holder may not reinvest all coupon payments.

Yield to maturity (YTM) is the annual expected return of a bond if held until maturity, also referred to as book yield.

If a bond is "callable," it means that the issuer has the right to buy the bond back at a predetermined date before its full maturity date.

Yield to maturity holds more importance as it incorporates the concept of the time value of money while calculating the return from bonds.

How to Use Excel to Calculate a Bond's Yield to Call. Bonds are investment vehicles that make regular coupon payments until maturity, at which time the bond's face value is paid. If a bond is ...

Calculating the yield to maturity of a specific bond might prove instructive, so let's do just that. The iShares 7-10 Year Treasury Bond ETF (IEF) is a medium-term treasury bond index ETF.

If a bond is "callable," it means that the issuer has the right to buy the bond back at a predetermined date before its full maturity date. The call.

Finally, add the two types of yield -- interest rate and bond price -- for each of the possible call dates as well as the maturity dates. Divide by the number of years to convert to an annual rate ...

So we can calculate its current interest rate like this: If the bond is held to maturity, five years of interest would produce a 24.25% total yield.

The formula for modified duration tells you the change in the value of a bond in relation to a change in its yield to maturity. In Excel, the formula is built into the MDURATION function. Follow ...

To calculate interest expense for the next semiannual payment, we subtract the amount of amortization from the bond's carrying value and multiply the new carrying value by half the yield to maturity.

Tax-equivalent yield is a calculation that investors can use to compare taxable and tax-free bonds. To understand how it works, it first helps to know a little about bond yields.