Calculates the gross redemption yield (in decimal format) of a fixed-interest bond on an interest payment date where there is an integer number of years until the bond matures.
public double GrossRedemptionYieldWithExplicitTime( doubleprice, doublecoupon, intredemption );
Parameters
price
The current price of the bond, including accrued interest.
coupon
The coupon per annum convertible half-yearly.
redemption
The integer number of years until redemption (i.e. the maturity of the bond).
Return Value
the gross redemption yield in decimal format (i.e. 1 percent = 0.01)
Remarks
That is, the total
(annual) yield of the fixed interest bond from now until maturity where the tax implications
of the investor are not taken into account.
Remarks:
In order to find the gross redemption yield we are required to solve an
equation of one variable (see PDF documentation for details). We find the solution of this
equation be applying a combination of the Bisection and Newton-Raphson methods with pre-set
algorithm parameters such as the upper bound of the solution and the precision used. The upper
bound of the yield over which the solution of sort is 200 percent and the precision
used is 0.001, if the yield falls out side this range or you desire a different level
of precision then you should us the method
(double,double,int,double,double).
The gross redemption yield is often used within the UK gilt market.