7.

4 Bond
yields
Bond yield -the anticipated return on an
investment, expressed as an annual
percentage.
For example, a 6% yield means that the
investment averages 6% return each year.
There are several ways to calculate yield,
but whichever way you calculate it, the
relationship between price and yield remains
constant: The higher the price you pay for a
bond, the lower the yield, and vice versa.
2
1.Yield to maturity
-the rate of return earned on a bond if it is held to
maturity.
Yield to maturity formula:

4
5
Example of Yield to Maturity Formula
You have just purchased an outstanding 15-year bond
with a par value of $1,000 for $1,145.68.Its annual coupon
payment is $75.What is the bond’s yield to maturity?

Here we find the bond’s YTM is equal to 6%.

Since the bond’s coupon rate ($75/$1,000=7.5%) is
greater than its YTM (6%),the bond is premium bond-
indicating that the interest rates have declined since the
bond is a premium bond-indicating that interest rates have
declined since the bond was originally
6 issued.
Example of YTM with PV of a Bond
Using the prior example, the estimated yield to maturity is 6%. However,
after using this rate as r in the present value of a bond formula, the present
value would be $1,178.86 which is fairly close to the price, or present value, of
$1145.68. Other examples may have a larger difference.

A higher yield to maturity will have a lower present value or purchase

price of a bond. In this example, the estimated yield to maturity shows a
present value of $1,178.86 which is higher than the actual purchase price.
Therefore, the yield to maturity will be a little higher than 6%.

Through trial and error, we adjust each estimated rate until the present
value equals the price of the bond.

Excel is helpful for the trial and error method by setting the spreadsheet
so that all that is required to determine the present value is adjusting a fixed
cell that contains the rate.
7
 2.Yield to call
-the rate of return earned on a bond when it is called
before its maturity date.
To calculate the yield to call, the investor must
understand that the market price of a bond is
equal to future cash flows. To find the exact YTC
value, the following equation should be solved:

1075– 1145.68
75 +
7
Approx YTC =
1075 + 1145.68
2

9
Question:
You have just purchased an outstanding 15-year bond with a
par value of $1,000 for $ 1,145.68.Its annual coupon payment is
$75.Assume that this bond is callable in 7 years at a price of
$1,075.What is the bond’s YTC ?
1075– 1145.68
75 +
7
Approx YTC =
1075 + 1145.68
2

Here we find the bond’s YTC is equal to 5.85%.

10
11
 “
Quotations are commonly
printed as a means of
inspiration and to invoke
philosophical thoughts from
the reader.

12
 concep
t
Bring the attention of
your audience over a key
concept using icons or
illustrations

13
 In two or three columns
Yellow Blue Red
Is the color of gold, Is the colour of the Is the color of blood,
butter and ripe clear sky and the and because of this it
lemons. In the deep sea. It is has historically been
spectrum of visible located between associated with
light, yellow is found violet and green on sacrifice, danger and
between green and the optical spectrum. courage.
orange.

14
 A picture is worth a thousand words

A complex idea can be

conveyed with just a
single still image,
namely making it
possible to absorb large
amounts of data quickly.

15
Want big impact?
Use big image.

16
 Use diagrams to explain your ideas

Vestibulum Vestibulum Vestibulum Vestibulum

congue congue congue congue

17
And tables to compare data

A B C

Yellow 10 20 7

Blue 30 15 10

Orange 5 24 16

18
 Maps

our office

19
89,526
,124
Whoa! That’s a big number, aren’t you
proud?

20
 89,526,124$
That’s a lot of money

185,244 users
And a lot of users

100%
Total success!

21
 Our process is easy
Vestibulum congue
03 tempus
Lorem ipsum dolor sit amet,
consectetur adipiscing elit, sed do
eiusmod tempor. Donec facilisis lacus
eget mauris.
Vestibulum congue
tempus
Lorem ipsum dolor sit amet,
consectetur adipiscing elit, sed do
eiusmod tempor. Donec facilisis lacus
eget mauris.
01 02
Vestibulum congue
tempus
Lorem ipsum dolor sit amet,
consectetur adipiscing elit, sed do
eiusmod tempor. Donec facilisis lacus
eget mauris.

22
 Let’s review some concepts
Yellow
Is the color of gold, butter
and ripe lemons. In the
spectrum of visible light,
yellow is found between
green and orange.
Yellow
Is the color of gold, butter
and ripe lemons. In the
spectrum of visible light,
yellow is found between
green and orange.
Blue
Is the colour of the clear sky
and the deep sea. It is
located between violet and
green on the optical
spectrum.
Blue
Is the colour of the clear sky
and the deep sea. It is
located between violet and
green on the optical
spectrum.
23
Red
Is the color of blood, and
because of this it has
historically been associated
with sacrifice, danger and
courage.
Red
Is the color of blood, and
because of this it has
historically been associated
with sacrifice, danger and
courage.
You can insert graphs from Google Sheets
24
 Android
project
Show and explain your
web, app or software
projects using these
Place your screenshot
here gadget templates.

25
 iPhone
project
Show and explain your
web, app or software
projects using these
Place your screenshot
here
gadget templates.

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 Tablet project
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projects using these
gadget templates.

Place your screenshot here

27
 Desktop
project
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web, app or software
Place your screenshot here
projects using these
gadget templates.

28
 THANKS!
Any questions?
You can find me at @username &
user@mail.me

29
 Credits

Special thanks to all the people who made and

released these awesome resources for free:
‐ Presentation template by SlidesCarnival
‐ Photographs by Unsplash

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This means that you can:

● Resize them without losing
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Isn’t that nice? :)

Examples:

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