Abstract
Obtaining general explicit yield to maturity (YTM) formulas is feasible for coupon bonds with integer maturities of less than five periods but, surprisingly, the literature lacks such formulas for three- and four-period bonds. I fill this void by providing the complete set of integer-maturity YTM formulas. Although the new formulas are unwieldy, they may be computationally advantageous over iterative methods of finding the YTM. Indeed, I present simulations indicating that the three-period YTM formula may require as little as one-third of the computation time needed with trial and error methods. Similarly, the four-period formula also produces substantial computational savings.
Recommended Citation
Rodriguez, Ricardo J.
(2003)
"The Complete Set of Explicit Yield to Maturity Formulas,"
Journal of Economics and Finance Education: Vol. 2:
Iss.
1, Article 3.
Available at:
https://scholarship.rollins.edu/jefe/vol2/iss1/3
