Yield to maturity on index linked bond
Discussion
Hello,
A serious 'non-whatcar in the next 5 years' thread from me..
Right then - if i wanted to calculated a yield to maturity for an index-linked bond.. can i just take assumed inflation out of 'Rate' and then use excel's Yieldmat function?
Or is it more complicated than that (and if so how!).
Ta!
A serious 'non-whatcar in the next 5 years' thread from me..
Right then - if i wanted to calculated a yield to maturity for an index-linked bond.. can i just take assumed inflation out of 'Rate' and then use excel's Yieldmat function?
Or is it more complicated than that (and if so how!).
Ta!
briSk said:
Hello,
A serious 'non-whatcar in the next 5 years' thread from me..
Right then - if i wanted to calculated a yield to maturity for an index-linked bond.. can i just take assumed inflation out of 'Rate' and then use excel's Yieldmat function?
Or is it more complicated than that (and if so how!).
Ta!
If we start with a simplified Fisher's equation: Nominal Yield = Real Yield + InflationA serious 'non-whatcar in the next 5 years' thread from me..
Right then - if i wanted to calculated a yield to maturity for an index-linked bond.. can i just take assumed inflation out of 'Rate' and then use excel's Yieldmat function?
Or is it more complicated than that (and if so how!).
Ta!
- so you might want to add inflation to 'Rate' (which will be the real yield on your Inflation-Linked Bond).
To calculate it properly, you will also need 1. an inflation forecast 2. take into account inflation premium (to compensate for inflation risk).
coolio.
I think I might make this thing work with some sort of 'all-in inflation' and then fiddle about with how that's comprised in a different part of the worksheet/later. In effect what I need to do is get a load of different things into the same unit of account and then "see which is biggest". So to a certain extent (for now) I think I can assume away differences in inflation - unless you know why I can't do that. I am glad you raise the point because, not really doing stuff like this, I had forgotten about that (/never really thought about it!).
I think I might make this thing work with some sort of 'all-in inflation' and then fiddle about with how that's comprised in a different part of the worksheet/later. In effect what I need to do is get a load of different things into the same unit of account and then "see which is biggest". So to a certain extent (for now) I think I can assume away differences in inflation - unless you know why I can't do that. I am glad you raise the point because, not really doing stuff like this, I had forgotten about that (/never really thought about it!).
Gassing Station | Finance | Top of Page | What's New | My Stuff