>Wow. This is very complicated. I expected a simpler explanation. I found another site where the formula for the YTM formula is shown. And it is very complicated. My conclusion: just stay with the conceptual understanding that can be used in comparing two or more bonds. The actual numbers are not so easy to arrive at.
Actually not, it's just five multiplications and five subtractions. You multiply with 1,0427 to get your amount when the year passes, and then subtract the 20 paid off for the coupon. Do that five times, that's all.
>One suspect of the site where I got the above example is that they spelled 'principle' as 'principal' :)
Ah the eternal lack of words in english, so they have to make the existing ones work overtime on multiple jobs, and still barely manage to eke an existence...
The principle is начало; the principal is either a school director, or a mother company (one whom you pay for franchise or whom you represent) or, in case of banking, the lump sum which is used as the basis to calculate the interest from. And they're all pronounced prinsipl. Isn't interest calculus more logical?