Approximate Yield on US T-Note/T-Bond

Q

What is the Approximate Yield on US Treasury Note/Bond?

✍: FYIcenter.com

A

Approximate Yield on a US Treasury Note/Bond (T-Note/T-Bond) refers to the equivalent interest rate calculated with revenues and capitals averaged out per year.

 $Approximate Yield = \frac{(Coupon Rate) \times Par + \frac{Par - PV}{T}}{0.5 \times (Par + PV)}$ 
 $Par = Par value (Face value)$ 
 $PV = Present Value (Initial investment)$ 
 $T = Term in years$

Note that capital gain and capital are averaged in the above formula:

 $Average Capital Gain = \frac{Par - PV}{T}$ 
 $0.5 \times (Par + PV)$

Approximate Yield is not widely used. Some publications mistakenly refer Approximate Yield as YTM (Yield To Maturity)

References:

How to Calculate Yield to Maturity, by Andrew Lokenauth.

⇒ Performance Measurements Summary on US T-Note/T-Bond

⇐ Current Yield on US T-Note/T-Bond

⇑ Performance Measurements of US Treasury Notes/Bonds

⇑⇑ US Treasury Securities

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