Fixed Coupon YTM and Discount Rate Matlab

 

syms x

eqn = 4 / (1+x) + 4 / (1+x)^2 + 104/ (1+x)^3==93.75 

S = solve(eqn,x,'Real',true) 

0.063535

This is YTM %6.35

What are the discount rates ?

First year

1/ (1.063535) 

0.94026

Second year

1/ (1.063535)^2 

0.88415

Third year

1/ (1.063535)^3 

0.83136

4 *0.94029 + 4 *0.88415 + 104*0.83136 

93.75

is it true ? Perfect.

Now we are going to calculate the gain

4* (1.063535)^2 + 4 * (1.063535)^1 + 4 * (1.063535)^0

12.779 this is from compound interest income

with redemption 100

112.779

and

eqn = ((112.779)/(1+x)^3)==93.75 
S = solve(eqn,x,'Real',true)

x=0.063535