Yield on certificate of deposit (CD)
Yield = cdyield(Price, CouponRate, Settle, Maturity, IssueDate,
Clean price of the certificate of deposit per $100 face.
If you have a vector of dirty or cash prices of CDs, compute the accrued
interest portion using
Annual interest rate in decimal.
(Optional) Day-count basis of the instrument.
For more information, see basis.
Each required input must be some certificates of deposit (
vector or scalar. The optional
Basis argument may
be either a
1 or a
a scalar, or the empty matrix (
Yield = cdyield(Price, CouponRate, Settle, Maturity,
IssueDate, Basis) computes the yield to maturity of a certificate
of deposit given its clean price.
This function assumes that the certificates of deposit pay interest at maturity. Because of the simple interest treatment of these securities, the function is best used for short-term maturities (less than 1 year). The default simple interest calculation is the actual/360 convention.
This example shows how to compute the yield on the certificate of deposit (CD), given a CD with the following characteristics.
Price = 101.125; CouponRate = 0.05; Settle = '02-Jan-02'; Maturity = '31-Mar-02'; IssueDate = '1-Oct-01'; Yield = cdyield(Price, CouponRate, Settle, Maturity, IssueDate)
Yield = 0.0039