The YIELD function returns a scalar that contains yield-to-maturity of a cash-flow stream based on frequency and value specified.

times

is an -dimensional column vector of times. Elements should be nonnegative.

flows

is an -dimensional column vector of cash flows.

freq

is a scalar that represents the base of the rates to be used for discounting the cash flows. If positive, it represents discrete compounding as the reciprocal of the number of compoundings. If zero, it represents continuous compounding. No negative values are accepted.

value

is a scalar that is the discounted present value of the cash flows.

The present value relationship can be written as

where is the present value of the asset, is the sequence of cash flows from the asset, is the time to the th cash flow in periods from the present, and is the discount function for time .

With continuous compounding:

With discrete compounding:

where is the frequency, the reciprocal of the number of compoundings per unit time period, and is the yield-to-maturity. The YIELD function solves for .

For example, the following statements produce the output shown in Figure 23.233:

timesn = T(do(1, 100, 1));
flows = repeat(10, 100);
freq = 50;
value = 682.31027;
yield = yield(timesn, flows, freq, value);
print yield;