50
BA II PLUS™ Calculator
Yield to Maturity on Bond Purchased on Interest Date
A 9% $1,000 semiannual commercial bond has 13 remaining
coupon payments. You can purchase the bond for $852.50
(ignoring commissions). At this price, what is your yield to
maturity and the annual effective rate?
Example: Yield to Maturity
Procedure
Keystrokes
Display
Set all variables to defaults.
&
}
!
RST
0.00
Set payments per year to 2.
&
[
2
!
P/Y=
2.00
Return to calculator mode.
&
U
0.00
Enter number of remaining
coupon payments.
13
,
N=
13.00
Enter bond price.
852.5
S
.
PV=
-852.50
Calculate the coupon payment.
9
2
6
2
<
1000
N
/
PMT=
45.00
Enter bond redemption value.
1000
0
FV=
1,000.00
Compute annual yield.
%
-
I/Y=
12.37
Store in memory.
D
1
Example: Effective Annual Interest
(continued from previous example)
Use the Interest Conversion worksheet (Chapter 7) to calculate
the effective annual interest rate.
Procedure
Keystrokes
Display
Select and clear Interest
Conversion worksheet.
&
v
&
z
NOM=
0.00
Recall rate from memory.
J
1
!
NOM=
12.37
Enter compounding periods.
#
#
2
!
C/Y=
2.00
Compute annual effective rate.
"
%
EFF=
12.75
The annual yield to maturity is 12.37% with semiannual
compounding. The equivalent annual effective rate is 12.75%.
