yieldtomaturity(amount, face, couponrate, maturity)

Compare these examples with those in Finance[levelcoupon] I hold a bond with face value of 1000 U with an annual coupon rate of 12%. The coupon is paid twice yearly. The maturity is in 3 years. What is the yield to maturity of the bond, compounded semi-annually given that its present value is 1050.75 U

There are 6 periods of half a year until maturity.

Yield is 5% per half year, therefore it is

10% per year. If the present value is the same as the face value

In other words, the yield is identical to the coupon rate when the bond is valued at par. (Remember that the extra factor of 2 is to convert the semi-annual yield to annual yield).

Now let the present value decline to less than face.

This example shows that the yield must increase when the value of the bond declines.

Finance[levelcoupon], Finance[perpetuity], Finance[presentvalue]