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BA II Plus: Yield to Maturity Step by Step

Calculate bond yield to maturity on the BA II Plus using TVM inputs.

TL;DR

YTM is the discount rate that equates a bond's price to its remaining coupon and principal cash flows. Enter price as PV, coupon as PMT, par as FV, and compute I/Y.

Formula Reference

YTM definition

Price = sum[CF_t / (1 + YTM)^t]

The calculator solves the yield iteratively.

BA II Plus Keystrokes

  1. 2nd CLR TVM
  2. Enter N as remaining coupon periods
  3. Enter the bond price as PV with the correct sign
  4. Enter coupon per period as PMT
  5. Enter par value as FV
  6. Press CPT I/Y

Worked Example

  • Problem: 5-year annual-pay 6 percent coupon bond priced at $920.15, par $1,000.
  • Keystrokes: 2nd CLR TVM; 5 N; 920.15 +/- PV; 60 PMT; 1000 FV; CPT I/Y.
  • Result: I/Y is about 8 percent.

Common Mistakes

  • Using annual coupon rate instead of coupon dollars.
  • For semiannual bonds, forgetting to annualize the periodic yield.
  • Entering price and par with the same cash flow sign.

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