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Calculating a Bond’s Yield to Maturity on an HP 10bII+

Article Quant Q&A · Author: Julian Nikolay Krogh-Fredrikse
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Summary

The document gives a calculator procedure for finding the yield to maturity of a fixed-coupon government bond with the HP 10bII+. It uses a bond priced at 100.44, with a 1.5% annual coupon, a 10-year term, and a face value of 100. The answer maps these inputs to the calculator’s standard time-value-of-money keys: maturity, negative purchase price, coupon payment, and redemption value. The user then computes the annual yield.

The example reports a yield of about 1.45%. This illustrates the distinction between a bond’s coupon rate and its yield to maturity: the latter reflects the purchase price and redemption cash flow as well as coupon payments. The steps assume annual coupon payments and a single redemption at maturity, consistent with the stated example. The answer is narrowly focused on entering this bond into one calculator model; it does not cover bonds with different payment frequencies, accrued interest, or other cash-flow features.

Key ideas

  • Yield to maturity can be calculated using a financial calculator’s time-value-of-money inputs.
  • Enter the purchase price as a negative present value and the redemption amount as future value.
  • The coupon rate is used as the periodic payment input in the example.
  • The reported yield differs from the coupon rate because the bond is purchased above face value.
  • The procedure assumes annual coupon payments and a single payment of face value at maturity.

Tags

Fixed income
Full text
# How to solve for effective interest rate of a government bond on HP 10bll+ financial calculator?


# How to solve for effective interest rate of a government bond on HP 10bll+ financial calculator?












Price of bond = 100.44 Nominal coupon interest rate (compounded annually) = 1.5% Duration: 10 years Face value (what you get back after 10 years, may be poor translation): 100

Spent hours now trying to figure out how I solve for the effective interest rate, and some help would be greatly appreciated!

## Answer by Alex C (score 1, accepted)

https://quant.stackexchange.com/a/49813

I assume you are looking for the Yield to Maturity

Press [C ALL] to remove any result already stored.

You have to use the top 5 buttons on the calculator to enter the maturity, the price (as a negative), the coupon and the face value:

10 [N] -100.44 [PV] 1.5 [PMT] 100 [FV]

Press [I/YR] the result 1.45209173 is displayed. This can be rounded to 1.45%.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.