I'm a bit confused on how to calculate the YTM of a bond with less than a full coupon's worth of periods remaining.

If I have a bond with 7 months to maturity with the next coupon payment due in 1 months, paying out coupons semiannually (so coupon and principal due in 7 months). What's the generalized formula for calculating the YTM of such a bond? Given I have the PV, the FV, and the PMT.

I figured that using =Rate in excel will assume the payments are due at equal intervals, which doesn't sit right considering reinvestment.

  • What exactly you think would be different from a bond with more time to maturity?
    – AKdemy
    Commented Nov 11, 2023 at 13:17

1 Answer 1


It depends on if your "present value" is a clean price (without accrued interest) or a dirty price (including accrued interest). The accrued interest is the amount of interest that has accrued since the last coupon was paid. In your case you could just take 5/6 of the coupon since it's been 5 months since the last semiannual coupon. The easiest way in Excel is to use the XIRR function, which requires the dates of the cash flows.

The initial item in the list should be the payment (either the clean PV + accrued interest, or the dirty PV) on the date of purchase. The remaining dates would be the dates of the coupons and the final redemption. From there, the XIRR function should give you the "Yield to Maturity" of the bond.

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