How to calculate profit from bonds maturing soon

[xiox]

I'm in the EU and bank interest rates are very low here. As an alternative for short term saving, I was looking at government bonds (e.g. Germany) that are maturing soon. I was thinking of just holding them to maturity, so there's little risk of the capital. However, I haven't found a useful site where I can rank the bonds available, by an effective interest rate.

Given a bond like this: https://www.boerse-frankfurt.de/bond/de ... ik-2-13-23, how does one calculate the effective interest rate if holding to maturity? Is the yield added to the difference between the price and face value, scaled by the time remaining?

Sorry for my ignorance here!

[Laughton]

Someone cleverer than me will come along shortly but the way I'd work it out would be:

Based on buying 1,000 bonds.

Cost @ 99.603 quoted price - 996.03
Plus accrued to date 10.63

Total cost 1,006.66

Maturity value @ 15/8/2023 1,020.00 including coupon

Profit 13.34 = 1.326% for the 171 days to maturity

Cost price will presumably be slightly higher when you factor in dealing costs etc.

[hiriskpaul]

Someone cleverer than me will come along shortly but the way I'd work it out would be:

Based on buying 1,000 bonds.

Cost @ 99.603 quoted price - 996.03
Plus accrued to date 10.63

Total cost 1,006.66

Maturity value @ 15/8/2023 1,020.00 including coupon

Profit 13.34 = 1.326% for the 171 days to maturity

Cost price will presumably be slightly higher when you factor in dealing costs etc.

Yes, that's one way to do it. Then "compound up" to get the annual equivalent rate

(1 + 1.326%)^(365/171) -1 = 2.85%

Another way would be to use the excel YIELD function. Yet another would be to late out all the cashflows and use XIRR to calculate the internal rate of return.

[GoSeigen]

Another way would be to use the excel YIELD function. Yet another would be to late out all the cashflows and use XIRR to calculate the internal rate of return.

Agree with hiriskpaul, very easy to do with the YIELD function in any spreadsheet.

GS

[xiox]

Thanks very much to all for your help.

[formoverfunction]

There are several sites that provide calculators. I have a spreadsheet from 2007 by Timothy R. Mayes, Ph.D.

http://www.tvmcalcs.com/about

I believe there is also lots of calculations information available on the WiseAlpha Bond Academy

https://www.wisealpha.com/

Along with some High Yield Corporate bonds in Euro.

[Yieldy]

yieldgimp.com contains a list of gilt yields.

[JohnW]

https://www.bogleheads.org/wiki/Bond_yield
Here is some information.