The semiannual rate should now be adjusted to an annual basis so the annual YTM is 1787. Do not round intermediate calculations round. Lets use this YTM formula for our example.
The primary importance of yield to maturity is the fact that it enables investors to draw comparisons between different securities and the returns they can expect from each.
The semiannual rate should now be adjusted to an annual basis so the annual YTM is 1787. N years to maturity YTM formula or yield to maturity equation is utilized to figure the yield on a security bond on the basis of its current market price. Where C is the annual coupon amount F is the face value of the bond P is the current bond price and n is the total number of years till maturity. Calculating YTM is working backwards from the present value of a bond formula and trying to determine what r is.