Bond yield formula excel

When assessing the profitability of bonds, analysts use a concept called yield to determine the amount of income an investment expects to generate each year.

Yield is prospective and should not be confused with the rate of return, which refers to realized gains.

Excel yield function monthly frequency

To calculate the current yield of a bond in Microsoft Excel, enter the bond value, the coupon rate, and the bond price into adjacent cells (e.g., A1 through A3). In cell A4, enter the formula "= A1 * A2 / A3" to render the current yield of the bond.

However, as a bond's price changes over time, its current yield varies. Analysts often use a much more complex calculation called yield to maturity (YTM) to determine the bonds' total anticipated yield, including any capital gains or losses due to price fluctuation.

Calculating Yield in Excel

To calculate the YTM of a bond in Excel, you need the following information:

• Settlement Date: The date when you purchased the security. All dates should be entered using the DATE function in Excel rather than as text.
• Maturity Date: This is
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