1. Does anyone know how the ask and bid yields are calculated on this corporate bond?


    Additional screenshot

    I tried to use BEY calculation but I keep arriving at different answers.

  2. Does anyone know what the $500K means?

If you need more info about the bond, please let me know. Cheers.

ASK 89.550(9.999%) x $500K
BID 85.000(11.562%) x $500K

Maturity date: 02’May’2025
Coupon: 6.75%
Par Value: 100
Call date: unknown
CUSIP: 316162227

Days to maturity: 1457 days
  • 1
    Here's an approximate calculation for the Ask: 100 - 89.55 = 10.45; 10.45 / 3.9918 = 2.62; 6.75 + 2.62 = 9.37; 9.37 / 89.55 = 10.46% . kbhscape.com/bond.htm .
    – S Spring
    May 9, 2021 at 0:17
  • @SSpring thanks for the try :)
    – Ron Jab
    May 9, 2021 at 7:06
  • The top "$500K" is the ask size, and the bottom "$500K" is the bid size.
    – Flux
    May 9, 2021 at 11:03
  • 1
    Well, here's what happened. Multiple posters were showing up on this forum with incorrect bond pricings. The situation seemed like a scam occurring somewhere. Posters answering the questions seemed to be supporting the scams. Then finally the source of the problem was found to be an incorrect example in a Wikipedia article. Then next thing that happened is that a poster on the Math forum asked for an approximate yield-to-maturity calculation. And then an approximate, or an alternative, yield-to-maturity calculation was found with KBH Applications.
    – S Spring
    May 9, 2021 at 17:58
  • 1
    @Flux thanks for the explanation, I also found out, that in the bonds prospectus that it has 2 ISINs which I never knew until now that a security can have 2 ISINs ibb.co/yhkWgmL
    – Ron Jab
    May 10, 2021 at 16:37

1 Answer 1


Yield for a coupon-bearing bond is not a simple closed-form calculation. You have tried a few approximations that may be close (or maybe not), but the exact calculation requires you to look at the current cost of the bond (including any accrued interest), all future cashflows (the coupons plus the final redemption), and calculate the equivalent interest rate of that investment. To do that, you plug in an interest rate into the present value calculations (sum of the present value of all cash flows), and keep trying values until you get the exact present value (price) of the bond.

For this particular bond that matures in May of 2025, that means that there are 8 semi-annual cash flows of 33.75 (1,000 * 6.75% /2) and the final redemption of 1,000. With a price of 85 (plus ~1 week of accrued interest) that gives a yield of 11.562%

This bond is also callable, which can change the yield calculation a bit (what is the worst yield that I would get if the bond was called at one of its call dates). That's an even more complex calculation.

In other words, At what interest rate could you invest the cost of the bond (and the coupons as you receive them) and have the same amount in the end when the bond matures? If you buy the bond at 89.55, that would be (if the bond pays out to maturity) equivalent to putting it (and the coupons) in a savings account that pays 9.999% interest. But, you run the risk that the bond won't pay out, in which case you'll get much less than $1,000 back (if any) at the end.

Does anyone know what the $500K means?

That means that someone is willing to buy $500k of bonds at that price. If someone wants to sell more than $500k, they may have to accept a lower price for any bonds after that $500k is fulfilled (it's the same concept as the number of shares in the order book for stocks)

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .