No. of Recommendations: 0
kh: The long form:

PV= [FV/(1+r)^n] + (CF/r)(1-[1/(1+r)^n])

PV is the present value of the bond, including transaction fees
FV is $1000 (typically)
n is the number of years to maturity
r is the IRR (which for bonds is the YTM)

Solving for r is usually done with a calculator, but trial and error works just as well. Remember to keep 'r' and 'n' in the same time frame: since interest is often paid semi-annually, n would be in 6 month intervals, and r would be half the annual rate.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.