One measure of a bond\'s performance is its yield to maturity (YTM). YTM values

Question

One measure of a bond's performance is its yield to maturity (YTM). YTM values for government bonds are complex to calculate and are published in tables. However they can be approximated with the simple formula YTM = intr + a/b, where intr is the interest earned per year, a = face value - current market price/years until maturity, and b = face value + current market prices/2. For instance suppose a bond has a face value of $1000, a coupon interest rate of 4%, matures in 15 years and currently sells for $1180. Then intr = .04 middot 1000 = 40, a = 1000 - 1180/15 = -12, b = 1000 + 1180/2 = 1090, and YTM's = 40 - 12/1090 2.57%

Explanation / Answer

#include <iostream>
using namespace std;
int main() {
   float fv,intr,mp,yum,YTM,a,b;
   cout<<"Enter face value : ";
   cin>>fv;
   cout<<" Enter coupon interest rate : ";
   cin>>intr;
   cout<<" Enter current market price : ";
   cin>>mp;
   cout<<" Years until maturity : ";
   cin>>yum;

   a = (fv-mp)/yum;
   b = (fv+mp)/2;

   YTM = (intr+a)/b;

   cout<<" YMT : "<<YMT;

return 0;
}

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