Yield to Call for Callable Bond Solution

STEP 0: Pre-Calculation Summary
Formula Used
Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2))
YTC = ((CP+(C-CBP)/ny)/ ((C+CBP)/2))
This formula uses 5 Variables
Variables Used
Yield to Call - Yield to Call calculates the yield if a callable bond is called before maturity.
Coupon Payment - Coupon Payment is a periodic interest payment that the bondholder receives during the time between when the bond is issued and when it matures.
Theoretical Price of Call Option - Theoretical Price of Call Option is based on the current implied volatility, the strike price of the option, and how much time is left until expiration.
Current Bond Price - Current Bond Price is the present discounted value of the future cash stream generated by a bond.
Number of Years to Track Growth - Number of Years to Track Growth is the total number of years over which the growth occurred.
STEP 1: Convert Input(s) to Base Unit
Coupon Payment: 20 --> No Conversion Required
Theoretical Price of Call Option: 1220 --> No Conversion Required
Current Bond Price: 150 --> No Conversion Required
Number of Years to Track Growth: 3 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
YTC = ((CP+(C-CBP)/ny)/ ((C+CBP)/2)) --> ((20+(1220-150)/3)/ ((1220+150)/2))
Evaluating ... ...
YTC = 0.549878345498783
STEP 3: Convert Result to Output's Unit
0.549878345498783 --> No Conversion Required
FINAL ANSWER
0.549878345498783 0.549878 <-- Yield to Call
(Calculation completed in 00.004 seconds)

Credits

Created by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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10+ Bond Yield Calculators

Coupon Bond Valuation
Go Coupon Bond = Annual Coupon Rate*((1-(1+Yield to Maturity (YTM))^(-Number of Payments Per Year))/(Yield to Maturity (YTM)))+(Par Value at Maturity/(1+Yield to Maturity (YTM))^(Number of Payments Per Year))
Yield to Call for Callable Bond
Go Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2))
Bond Convexity Approximation
Go Bond Convexity Approximation = (Bond Price when Incremented+Bond Price when Decremented-2*(Bond Value))/(2*Bond Value*(Change in Interest Rate)^2)
Yield to Maturity
Go Yield to Maturity (YTM) = (Coupon Payment+((Face Value-Price)/Years to Maturity))/((Face Value+Price)/2)
Holding Period Yield
Go Holding Period Yield = (Interest Paid+Face Value-Purchase Price)/Face Value
Zero Coupon Bond Effective Yield
Go Zero Coupon Bond Effective Yield = (Face Value/Present Value)^(1/Number of Periods)-1
Zero Coupon Bond Value
Go Zero Coupon Bond Value = Face Value/(1+Rate of Return/100)^Time to Maturity
Bank Discount Yield
Go Bank Discount Yield = (Discount/Face Value)*(360/Days to Maturity)*100
Money Market Yield
Go Money Market Yield = Holding Period Yield*360/Time to Maturity
Current Bond Yield
Go Current Bond Yield = Coupon Payment/Current Bond Price

Yield to Call for Callable Bond Formula

Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2))
YTC = ((CP+(C-CBP)/ny)/ ((C+CBP)/2))

What is Yield to Call for a Callable Bond?

The Yield to Call (YTC) for a callable bond is the yield an investor can expect to receive if the bond is called before its maturity date. It is similar to the Yield to Maturity (YTM) formula for a non-callable bond, but it incorporates the call price and the remaining years until the bond can be called.
Yield to Call is important for investors in callable bonds because it helps assess the potential return if the issuer decides to call the bond before its original maturity date. Investors should be aware of call provisions and their potential impact on yield when evaluating callable bonds.

How to Calculate Yield to Call for Callable Bond?

Yield to Call for Callable Bond calculator uses Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2)) to calculate the Yield to Call, The Yield to Call for Callable Bond formula is defined as a formula which calculates the yield if a callable bond is called before maturity. It considers the call price and the remaining years until the bond can be called. Yield to Call is denoted by YTC symbol.

How to calculate Yield to Call for Callable Bond using this online calculator? To use this online calculator for Yield to Call for Callable Bond, enter Coupon Payment (CP), Theoretical Price of Call Option (C), Current Bond Price (CBP) & Number of Years to Track Growth (ny) and hit the calculate button. Here is how the Yield to Call for Callable Bond calculation can be explained with given input values -> 0.548148 = ((20+(1220-150)/3)/ ((1220+150)/2)).

FAQ

What is Yield to Call for Callable Bond?
The Yield to Call for Callable Bond formula is defined as a formula which calculates the yield if a callable bond is called before maturity. It considers the call price and the remaining years until the bond can be called and is represented as YTC = ((CP+(C-CBP)/ny)/ ((C+CBP)/2)) or Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2)). Coupon Payment is a periodic interest payment that the bondholder receives during the time between when the bond is issued and when it matures, Theoretical Price of Call Option is based on the current implied volatility, the strike price of the option, and how much time is left until expiration, Current Bond Price is the present discounted value of the future cash stream generated by a bond & Number of Years to Track Growth is the total number of years over which the growth occurred.
How to calculate Yield to Call for Callable Bond?
The Yield to Call for Callable Bond formula is defined as a formula which calculates the yield if a callable bond is called before maturity. It considers the call price and the remaining years until the bond can be called is calculated using Yield to Call = ((Coupon Payment+(Theoretical Price of Call Option-Current Bond Price)/Number of Years to Track Growth)/ ((Theoretical Price of Call Option+Current Bond Price)/2)). To calculate Yield to Call for Callable Bond, you need Coupon Payment (CP), Theoretical Price of Call Option (C), Current Bond Price (CBP) & Number of Years to Track Growth (ny). With our tool, you need to enter the respective value for Coupon Payment, Theoretical Price of Call Option, Current Bond Price & Number of Years to Track Growth and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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