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%.
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