I want to verify Vanguard's math regarding Yield to Maturity on a recent purchase of long term TIPS. The number I get is fairly close to theirs, but far enough off that I can't attribute it to rounding. I must be doing something wrong. So, what is the formula for determining YTM on long term TIPS purchased on the secondary market? Here are the numbers pertaining to a purchase I made on 4/29/2004 (yesterday):
--39 bonds ($39,000)
--Price - $124.63
--Maturity Date - 4/15/2029
--Index Ratio on 4/29/04 - 1.13224
--Coupon - 3.875%
--Accrued Interest - $70.14
--Commission - $40.00 (YTM is inclusive of commission)
Here's what Vanguard comes up with:
Principal amount: $55,041.32 (but I get $55,033.32)
They add the Accrued interest and commission for a total of $55,151.46.
They have a yield to maturity of 2.532%.
What is the formula to determine yield to maturity? Are they correct on this one? JWR1945? Anyone?
--39 bonds ($39,000)
--Price - $124.63
--Maturity Date - 4/15/2029
--Index Ratio on 4/29/04 - 1.13224
--Coupon - 3.875%
--Accrued Interest - $70.14
--Commission - $40.00 (YTM is inclusive of commission)
Here's what Vanguard comes up with:
Principal amount: $55,041.32 (but I get $55,033.32)
They add the Accrued interest and commission for a total of $55,151.46.
They have a yield to maturity of 2.532%.
What is the formula to determine yield to maturity? Are they correct on this one? JWR1945? Anyone?