Tenure|Price/unit|YTM|Coupon|Frequency|Face Value|
71 months|1,276.75|4.16%|8.12%|Yearly|1,000|
This info is for REC Ltd Bond as shown in Coin… Here I tried to calculate the YTM myself but a different value is coming up instead of 4.16%. Please guide if there’s something wrong with the calculation or something else is missing?
Calculation -
If 100 qty is bought then buy price will be 127675, rate of interest is 8.12% so annual interest will be 8120 as face value is 1000.
Total invested years are 5.916. So total interest for all those years will be 8120*5.916 = 48037.92.
Now, to get the net profit if bond is held till maturity we’ll subtract the difference in buy price and face value, 127675-100000 = 27675 from the total interest. net profit = 48037.92-27675 = 20362.92.
YTM = (20362.92/127675)*100 = 15.949 now we divide this with no. of years 15.949/5.916 = 2.69%
I dunno if this is even the right way to calculate this but I saw this method in varsity, Please help!