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URL:  https://boards.fool.com/it-is-more-complicated-but-is-similar-to-13204756.aspx

Subject:  Re: YTM Calculation? Date:  8/28/2000  6:08 PM
Author:  PapaDoc Number:  1010 of 36731

It is more complicated, but is similar to calculating the discount rate of corporate debt. You set the present value of the bond equal to a series of future cash flows and solve for YTM. It would look like:

1102.85=[40/(1+YTM)^1] + [40/(1+YTM)^2] +

......+ [40/(1+YTM)^20]


$40 is the semi annual interest payment, with 20 pay periods in the calculation. This does not take into account tax concequences.

Pat
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