F = Face value.

Nominal interest rate = Yield to call

P = Market price.
C = Coupon/ interest payment.
N = Year’s to maturity.
PV = Present value.
YTM = Yield of maturity.
YTC = Yield of callable.
Bond holders = yield to maturity
Current yield:
Current yield = interest amount x 100
Market price

Yield of maturity when coupon Yield of maturity when coupon interest is

interest is yearly: half yearly: “m= no of times interest be
paid in a year”:
Approx YTM = C + F – P Approx YTM = C + F – P
n . m nxm
F+P F+P
2 2

Zero coupon bond yield:

Zero coupon bond yield= F . 1/n - 1

PV

Market price having Yield of maturity and interest yearly:

Market price = C 1- (1+Ytm)-n + F .

Ytm (1+Ytm)n

Market price having Yield of Maturity and interest yearly: “m= no of times interest be paid in a
year”

Market price = C 1- (1+Ytm/m)-nxm + F .

m Ytm/m (1+Ytm/m) nxm

Market price having Yield of Callable and interest yearly:

Market price = C 1- (1+Ytc)-n + Call price

Ytc (1+Ytc)n

Market price having Yield of Callable and interest yearly: “m= no of times interest be paid in a
year”

Market price = C 1- (1+Ytc/m)-nxm + Call price

m Ytc/m (1+Ytc/m)nxm

Capital Gain or loss:

Bond holders return = Current yield + Capital gain or loss