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Quote Mortagagemortgagelender E Lender Sr 1 Mortgage Mortgage Lender How to Calculate a Yield to Maturity Loan | eHow.com

Quote Mortagagemortgagelender E Lender Sr 1 Mortgage Mortgage Lender

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Subtract the face value (F) of the bond from the current market price (P). For example, if F is $100 and P is $90, then P - F = -$10.

  • 2

    Divide this value by the number of years to maturity (n), as in (F-P)/n. If n = 5, then (F-P)/n = -$2.

  • 3

    Add the interest payment (C) to this value, as in C +(F-P)/n. If C is $5, then C +(F-P)/n = $3.

  • 4

    Divide the combined amount from Step 3 by the price plus face value divided by 2, as in (C +(F-P)/n) / ((F+P)/2). That is, 3 divided by 95 ($100 plus $90 divided by 2) equals .0315789.

  • 5

    The final value from Step 4, multiplied by 100 to get a percentage, is the yield to maturity. Yield to maturity = (C +(F-P)/n) / ((F+P)/2). In the example, the yield to maturity equals 3.158 percent.

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