In this video, you will go through an example to find out the yield to call of a bond.

Views: 5807
maxus knowledge

An example of Yield-to-Call using the 5-key approach. Also discusses the call provision and when a bond is likely to be called.

Views: 35020
Kevin Bracker

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In this lesson, we began to understand the important terms that truly value a bond. Since most investors will never hold a bond throughout the entire term, understanding how to value the asset becomes very important. As we get into the second course of this website, a thorough understanding of these terms is needed. So, be sure to learn it now and not jump ahead.
We learned that there are two ways to look at the value of a bond, simple interest and compound interest. As an intelligent investor, you'll really want to focus on understanding compound interest. The term that was really important to understand in this lesson was yield to maturity. This term was really important because it accounted for almost every variable we could consider when determining the true value (or intrinsic value) of the bond. Yield to Maturity estimates the total amount of money you will earn over the entire life of the bond, but it actually accounts for all coupons, interest-on-interest, and gains or losses you'll sustain from the difference between the price you pay and the par value.

Views: 372834
Preston Pysh

A bond selling at a premium is very likely to be called early; therefore it will earn the Yield to Call not the Yield to Maturity or YTM.

Views: 4063
pjcalafi

In this video, you will learn the fundamentals to find out the yield to call of a bond

Views: 730
maxus knowledge

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Yield to Maturity
This is a rate of return which is generated by a bond over a period up to its maturity. If the future cash flows of interest and redemption price are discounted using YTM, the present value of such cash flows will be equal to its actual market price. In other words, a rate of discounting which can make the intrinsic value equal to the actual market price can be considered as YTM Rate.
For example, if a bond is issued at par with face value of ` 1,000 and redeemable at par with coupon rate of 10% per annum is actually providing the yield of 10% per annum. In other words, the YTM of such bond shall be 10% per annum.
However, in the same example if the bond is redeemable at premium, other things remaining same, it would obviously provide an yield higher than 10%.
Annuity Bonds
These bonds are paid over a period of time by the same amount of cash flows each year. Therefore, there is neither any coupon payment nor any redemption price. All the cash flows of these bonds are spread over their life by way of annuities.
These are bonds which would repay the principal over its life along with interest by way of constant cash flows. For example, a bond that is issued at ` 1,000 with 5 years life provides an annuity of ` 260 per annum at end of each year over its life of 5 years.
The total cash flows over 5 years will be (` 260 x 5) = ` 1,300
This includes the principal repayment of ` 1,000 and the total interest of ` 300.
Changes in Intrinsic Value of Bond as it approaches its Maturity
(Inter-relationship between Intrinsic value and Redeemable Value)
The intrinsic value of the bond gets closer to the redemption price as and when the bond approaches its maturity. If a Premium Bond is redeemable at par, its intrinsic value constantly declines over time. If a Discount Bond is redeemable at par, its intrinsic value constantly rises over time.
Zero Coupon Bonds (ZCB)
These are bonds which do not provide any coupon payments. In other words, there is no interest payable on such bonds. These bonds are either issued at nominal discount or at par and redeemable at a significant premium. The present value of cash flows from this bond considers only the present value of redemption price which is its intrinsic value. With maturity date coming closer the intrinsic value of such bonds increases.
Deep Discount Bonds (DDB)
These are such zero coupon bonds, which are redeemable at par but issued at significant discount.
Callable Bonds
A callable bond is such a bond that provides an option to the issuer to call for redemption at an earlier date as compared to maturity. Such bonds are generally redeemed before maturity if the interest rate in the market declines. Inversely if the interest rate increases the issuer will opt for redemption of the bonds at the specified maturity date only. The call date is a specified date at which the issuer can call for premature redemption. The call price of a bond generally is higher than the redemption price payable on maturity, in order to compensate the investor.
Yield to Call (YTC)
YTC is applicable only for callable bonds. YTC is determined just like YTM. The only difference is, while determining YTC the applicable date of redemption will be the call date and not maturity date and the redemption value applicable at the call date shall be considered in place of redemption at maturity.
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Views: 2563
CA Nikhil Jobanputra

In this revision video we work through some numerical examples of the inverse relationship between the market price of fixed-interest government bonds and the yields on those bonds.
Government bonds are fixed interest securities. This means that a bond pays a fixed annual interest – this is known as the coupon
The coupon (paid in £s, $s, Euros etc.) is fixed but the yield on a bond will vary
The yield is effectively the interest rate on a bond. The yield will vary inversely with the market price of a bond
1.When bond prices are rising, the yield will fall
2.When bond prices are falling, the yield will rise
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tutor2u

How to find the yield to call on premium bonds with a financial calculator. This problem is from the 2nd Exam - Additional practice questions

Views: 6055
pjcalafi

The current yield and yield to maturity (YTM) are two popular bond yield measures. The current yield tells investors what they will earn from buying a bond and holding it for one year. The yield to maturity (YTM) is the bond's anticipated return if held until it matures.

Views: 96061
Investopedia

Sometimes firms call their bonds (i.e., payoff bondholders) early before maturity to retire old debt at high interest rates and replace it with new debt at low interest rates.
This video solves for the yield to call in these cases.

Views: 47
1sportingclays

This video will show you how to calculate the bond price and yield to maturity in a financial calculator.
If you need to find the Present value by hand please watch this video :)
http://youtu.be/5uAICRPUzsM
There are more videos for EXCEL as well
Like and subscribe :)
Please visit us at http://www.i-hate-math.com
Thanks for learning

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I Hate Math Group, Inc

What's the difference between a spot rate and a bond's yield-to-maturity? In this video you'll learn how to find the price of the bond using spot rates, as well as how to find the yield-to-maturity of a bond once we know it's price.
Simply put, spot rates are used to discount cash flows happening at a particular point in time, back to time 0. A bond's yield-to-maturity is the overall return that the investor will make by purchasing the bond - think of it as a weighted average!

Views: 6804
Arnold Tutoring

http://www.subjectmoney.com
http://www.subjectmoney.com/definitiondisplay.php?word=Yield%20to%20Call
For callable Bonds investors are interested in the Yield to Call . This is because if interest rates fall below the coupon rate of the bond then the firm is likely to repurchase the bond and issue new bonds at lower interest rates. Callable Bond s have a protection period where they cannot be repurchased however there is also sometimes an implicit form of call protection for bonds that are selling at deep discounts below their call price. If this is the case then even if interest rates drop a firm might not call the bond because their call price is more than the bond's market value so calling the bonds would not be beneficial to the firm. Bonds that are selling at a premium compared to their call price are much more likely to be called, therefore investors that hold Premium Bonds are much more interested in the yield to call than the Yield to Maturity . The yield to call is calculated the same as the yield to maturity is calculated except the time to call replaces the time to maturity and the call price replaces the par value. If a bond's call protection expires 3 years from today and the yield to maturity is 10 years then we would use 3 years for the time period to calculate the yield to call and the time to maturity to calculate the yield to maturity.

Views: 2298
VideoDefinition

This video makes a clear distinction between two commonly conflated fixed income market concepts: yield to maturity and rate of return. Though often described as a measure of future returns and regularly used as a proxy for such, as ways of conceiving of yield to maturity those interpretations are respectively inaccurate and potentially problematic. The presentation illustrates the method for computing the two measures and identifies why they will likely never be the same for long-term coupon securities.
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Insider's Guide to Finance

In this video, you will learn to find out current yield for a bond.

Views: 4503
maxus knowledge

There are several different types of yield you can use to compare potential returns on an investment. Chip Loughridge with Zions Direct explains Current Yield and Yield to Maturity, as well as when you would typically use these calculations.
What did you think? Leave a comment or subscribe to our channel to continue building your investment knowledge.
You can open an investment account and purchase stocks, bonds, CDs, mutual funds and more at www.zionsdirect.com or call us at 800-524-8875.
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Zions TV

Here is the third video in my new bond series. I have other videos showing the calculations using the HP10BII, TI-84, and the BAII.

Views: 1683
rnrfinance

Learn how to calculate yield to call on a bond.

Views: 180
Jaime Lancaster

In this introductory lecture, we explain the conceptual framework behind 'Yield To Maturity' and why it is conceptually different from 'Flat Yield'.
In the next two lectures, we will further explore the ideas put forward in this lecture, and both price a bond, given a yield to maturity input, and calculate a yield to maturity, given a bond price input.
Previous: http://www.youtube.com/watch?v=J0QNupJbBsw
Next: http://www.youtube.com/watch?v=C1b-UPfeBo0
For financial education from London to Singapore and beyond, please contact MithrilMoney via the following website:
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This MithrilMoney lecture was delivered by Andy Duncan, CQF.
Please read our disclaimer:
http://mithrilmoney.com/disclaimer/

Views: 49405
MithrilMoney

UPDATE: You can also find the YTM by trial and error. If you plug in 0.06 for the YTM in the equation this gives you $91,575, which is lower than $92,227. YTM = 0.058 gives you $92,376, which is a little bit higher than $92,227. YTM = 0.0585 gives you $92,175, but YTM = 0.0584 gives you $92,215 which is very close to $92,227. Thus, 5.84% is the approximate YTM
This video explains how to calculate the yield-to-maturity of a coupon bond. A comprehensive example is provided that shows the formula for calculating the yield, but the video also provides a Microsoft Excel formula that provides an easier means of determining the yield.
Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com
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Views: 77429
Edspira

This is a simple example for the calculation of current yield and yield to maturity of a bond.

Views: 22163
DrCaoMoney

In this video, you will go through an example to find out the yield to call of a bond.

Views: 551
Maxus Financial

how to calculate Yield to Maturity of a Coupon paying bond
How to calculate Yield to Call of a Coupon paying bond that is callable

Views: 4101
Elinda Kiss

In this video, you will learn to find out yield to maturity for a bond.

Views: 13376
maxus knowledge

In this video, you will learn to find out current yield for a bond.

Views: 5209
maxus knowledge

How to calculate the yield to call on a callable bond using Excel and the Texas Instruments BAII calculator.
(Recorded with http://screencast-o-matic.com)

Views: 1479
David Johnk

Yield to maturity (YTM, yield) is the bond's internal rate of return (IRR). It is the rate that discounts future cash flows to the current market price. For more financial risk management videos, visit our website at http://www.bionicturtle.com

Views: 221832
Bionic Turtle

Given four inputs (price, term/maturity, coupon rate, and face/par value), we can use the calculator's I/Y to find the bond's yield (yield to maturity). For more financial risk videos, visit our website! http://www.bionicturtle.com

Views: 131733
Bionic Turtle

This video from N S TOOR School of Banking, explains the concept of Yield to Maturity. It also provides a case study to understand the concept of YTM

Views: 177194
Ns Toor

We examine the theory behind how to calculate a required interest rate yield to maturity from a given bond price, then use three different methods in Excel to achieve the calculation.
The methods used in Excel are the use of a scroller tied to an interest rate field, the built-in RATE() function, and the GoalSeek Excel tool.
Previous: http://www.youtube.com/watch?v=C1b-UPfeBo0
Next: http://www.youtube.com/watch?v=j1Fq_1pg7xE
For financial education from London to Singapore and beyond, please contact MithrilMoney via the following website:
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This MithrilMoney lecture was delivered by Andy Duncan, CQF.
Please read our disclaimer:
http://mithrilmoney.com/disclaimer/

Views: 20940
MithrilMoney

Free Online Textbook @ https://businessfinanceessentials.pressbooks.com/
An example of calculating Yield-to-Maturity using the 5-key approach.

Views: 135816
Kevin Bracker

More videos at http://facpub.stjohns.edu/~moyr/videoonyoutube.htm

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Ronald Moy

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term bond yield, but is expressed as an annual rate. In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.
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Learning sessions

In this tutorial, you’ll learn how to approximate the Yield to Maturity (YTM) of a bond, including how you might modify it to cover Yield to Call and Yield to Put as well as real-life scenarios with debt investing.
http://breakingintowallstreet.com/
"Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
Table of Contents:
1:14 Part 1: The Yield to Maturity (YTM) and What It Means
5:27 Part 2: How to Quickly Approximate YTM
10:19 Part 3: How to Extend the Formula to Yield to Call and Yield to Put
13:32 Part 4: How to Use This Approximation in Real Life
16:27 Recap and Summary
Part 1: The Yield to Maturity (YTM) and What It Means
Yield to Maturity is the internal rate of return (IRR) from buying the bond at its current market price and holding it to maturity.
Assumption #1: You hold the bond until maturity.
Assumption #2: The issuer pays all the coupon and principal payments, in full, on the scheduled dates.
Assumption #3: You reinvest the coupons at the same rate.
Intuition: What’s the *average* annual interest rate % + capital gain or loss % you earn from the bond?
You can use the YIELD function to calculate this in Excel:
=YIELD(Settlement Date, Maturity Date, Coupon Rate, Bond Price % Par Value Out of the Number 100, 100, Coupon Frequency)
For example, if you buy a 5% bond for 96.23% of its par value on December 31, 2014, and hold it until its maturity on December 31, 2024, you could enter:
=YIELD(“12/31/2014”, “12/31/2024”, 5%, 96.23, 100.00, 1) = 5.500%
You could also project the cash flows from the bond and use the IRR function to calculate YTM, but this will work only for annual periods and annual coupons.
Part 2: How to Quickly Approximate YTM
Approximate YTM = (Annual Interest + (Par Value – Bond Price) / # Years to Maturity) / (Par Value + Bond Price) / 2
Intuition: Each year, you earn interest PLUS an annualized gain on the bond price if it’s purchased at a discount (or a loss if it’s purchased at a premium).
And you earn that amount on the “average” between the initial bond price and the amount you get back upon maturity.
For example, on a 10-year $1,000 bond with a price of $900 and coupon of 5%:
Annual Interest = 5% * $1,000 = $50
Par Value – Bond Price = $1,000 – $900 = $100
(Par Value + Bond Price) / 2 = ($1,000 + $900) / 2 = $950
Approximate YTM = ($50 + $100 / 10) / $950 = $60 / $950 = ~6.3%
There are a few limitations: the approximation doesn’t work as well with big discounts or premiums to par value, nor does it work as well with different settlement and maturity days. It also will not handle floating interest rates since it assumes a fixed coupon.
Part 3: How to Extend the Formula to Yield to Call and Yield to Put
Call options on bonds let companies redeem a bond early when interest rates have fallen, or its credit rating has improved, meaning it can refinance at a lower rate.
Usually, the company has to pay a premium to par value to call the bond early.
Put options are the opposite, and let investors force early redemption (usually when interest rates have risen, or the company’s credit rating has fallen).
Approximate Yield to Call or Yield to Put = (Annual Interest + (Redemption Price – Bond Price) / # Years to Maturity) / ((Redemption Price + Bond Price) / 2)
For example, to calculate the Yield to Call on a 10-year $1,000 bond with a price of $900, coupon of 5%, and a call date 3 years from now at a redemption price of 103:
Approximate YTC = ($50 + ($1,030 – $900) / 3) / (($1,030 + $900) / 2)
Approximate YTC = ($50 + $43) / $965 = $93 /$965 = ~9.7%, which you can estimate as “just under 10%”
Part 4: How to Use This Approximation in Real Life
Example: You’re at a credit fund that targets a 10% IRR on investments in high-yield debt.
JC Penney has a 4-year 7.950% bond that’s currently trading at 91.75 (as in, 91.75% of par value).
This seems like an easy “yes”: you get around 8% interest per year + an 8% discount / 4, and ~10% / average price of 96% results in a yield just above 10%.
BUT will a distressed company be able to repay the bond principal upon maturity? What if its financial situation worsens?
You estimate that in the best-case scenario, you’ll get 65% of the principal back upon maturity (65% “recovery percentage”). The recovery percentage will be 47% and 13% in more pessimistic cases.
Scenario 1 Approximate YTM: (8% – 27% / 4) / 78.5% = 1.6%
Scenario 2 Approximate YTM: (8% – 45% / 4) / 69.5% = -4.7%
So this is almost certainly a “No Invest” decision if these recovery percentages are accurate – even in the Upside Case, we’re far below 10%.
RESOURCES:
https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula-Slides.pdf
https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula.xlsx

Views: 15984
Mergers & Inquisitions / Breaking Into Wall Street

Why bond prices move inversely to changes in interest rate. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
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Views: 542888
Khan Academy

http://www.learnbonds.com/yield-to-maturity/ - Yield to maturity takes into account both the coupon interest payment you receive on the bond, changes in the value of the bond as it moves towards maturity, and the return received on the reinvestment of interest payments.

Views: 9810
Learn Bonds

Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 3 percent coupon with semiannual coupons. The bond is currently trading at $97. What are the stream of cash flows associated with the bond? What is the yield to maturity.

Views: 6370
Jonathan Kalodimos, PhD

An example of finding the YTM (yield to maturity) of a bond using the =RATE formula in Excel.

Views: 51862
Jeff Davis

Estimating the yield to maturity using Interpolation.

Views: 1687
Brian Byrne

Hello friends! In this video you will learn the following concepts of Accounting and Finance as well as for Advanced Bank Management. This way we'll cover module b Business Mathematics of Advance Bank Management of CAIIB. This is concept of time value of money. You'll also get the idea of Net present value.
What is yield to maturity (YTM)?
What is bond?
How to calculate Yield to Maturity (YTM) ?
Introduction of yeild to maturity
Value a Bond and Calculate Yield to Maturity (YTM)
Related terms to bond.
Numerical on bond
Value of bond
JAIIB CAIIB BOND BASICS DIFFERENCE BETWEEN YIELD AND YTM
Coupon rate
face value
Finding Yield to Maturity using Excel
How to calculate yield to maturity?

Views: 37141
GrowYourself

Callable bond is a type of bond that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches the date of maturity.[1] In other words, on the call dates, the issuer has the right, but not the obligation, to buy back the bonds from the bond holders at the call price. Technically speaking, the bonds are not really bought and held by the issuer but cancelled immediately.
Call price will usually exceed the par or issue price. In certain cases, mainly in the high-yield debt market, there can be a substantial premium. See there for more details.
The issuer has an option, for which he pays in the form of a higher coupon rate. If interest rates in the market have gone down at the time of the call date, the issuer will be able to refinance his debt at a cheaper level and so will call the bonds. Another way to look at it is that as interest rates have gone down, the price of the bond has gone up. Therefore, it is advantageous to buy the bonds back at the par value. What this means exactly is that a callable bond will always be sold at the highest price but to the most prominent bidder. The issue regarding the bond will almost always result in detrimental circumstances for the parties involved in the merger or acquisition of the bond.
The investor has the benefit of a higher coupon than he would have had with a straight, non-callable bond. On the other hand, if interest rates go down, the bonds get called, and he can only invest at the lower rate. This is comparable to selling an option—you get a premium upfront, but you have downside if the option gets exercised.
The largest market for callable bonds is that of issues from the government sponsored entitites, better known as U.S. Agencies. They own a lot of mortgages and mortgage-backed securities. In the U.S. mortgages are usually fixed rate, and can be prepaid early without cost, contrary to other countries. If rates go down, a lot of home owners will refinance at a lower rate. This means that the Agencies lose assets. By issuing a large number of callable bonds, they have a natural hedge, as they can then call their own issues and refinance at a lower rate.
The price behaviour of a callable bond is the oppsite of that of puttable bond. Since call option and put option are not mutually exclusive, a bond may have both options embedded.

Views: 11869
mbacalculator

In this video, I discuss how to interpret a common Series 7/66 question on Yield to Maturity. Concepts covered: nominal rate, coupon, current yield, yield to maturity, bond see-saw, inverse relationship between prices and yields, bonds, formulas for the test.
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Views: 1297
Basic Wisdom

Bond Semi-annual Yield-to-Maturity

Views: 14103
Prof. Mohammed Ahmed

In this video, you will learn the fundamentals to find out the yield to call of a bond.

Views: 24
Maxus Financial

For callable bonds investors are interested in the yield to call. This is because if interest rates fall below the coupon rate of the bond then the firm is likely to repurchase the bond and issue new bonds at lower interest rates. Callable bonds have a protection period where they cannot be repurchased however there is also sometimes an implicit form of call protection for bonds that are selling at deep discounts below their call price. If this is the case then even if interest rates drop a firm might not call the bond because their call price is more than the bond's market value so calling the bonds would not be beneficial to the firm. Bonds that are selling at a premium compared to their call price are much more likely to be called, therefore investors that hold premium bonds are much more interested in the yield to call than the yield to maturity. The yield to call is calculated the same as the yield to maturity is calculated except the time to call replaces the time to maturity and the call price replaces the par value. If a bond's call protection expires 3 years from today and the yield to maturity is 10 years then we would use 3 years for the time period to calculated the yield to call and the time to maturity to calculate the yield to maturity.
https://www.youtube.com/user/Subjectmoney
https://www.youtube.com/watch?v=oNTqoxoyX5E

Views: 2293
Subjectmoney

In this video, you will learn the fundamentals to find out the yield to maturity of a bond. You will also learn about perpetual bonds.

Views: 873
maxus knowledge

Video provides step-by-step instructions for finding the yield of a corporate bond using the Texas Instruments BA-II Plus Calculator

Views: 125767
Jim McIntyre