1. What is the SEBI Yield Formula?

The SEBI yield formula calculates the yield to maturity for corporate bonds in India as per Securities and Exchange Board of India guidelines. It provides a standardized method for comparing bond yields.

2. How Does the Calculator Work?

The calculator uses the SEBI yield formula:

Where:

• \( Face\ Value \) — The bond's par value (₹)
• \( Price \) — Current market price of the bond (₹)
• \( Coupon\ Payment \) — Annual interest payment (Face Value × Coupon Rate)
• \( Years \) — Years remaining to maturity

Explanation: The formula accounts for both the capital gain/loss and coupon payments relative to the average investment in the bond.

3. Importance of Yield Calculation

Details: Accurate yield calculation is crucial for bond investors to compare different fixed income securities and assess their potential returns.

4. Using the Calculator

Tips: Enter face value and price in rupees, coupon rate as percentage, and years to maturity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use SEBI yield instead of simple yield?
A: SEBI yield provides a more accurate measure of total return by accounting for both coupon payments and capital gains/losses.

Q2: What are typical corporate bond yields in India?
A: Yields vary by credit rating and maturity, typically ranging from 6% to 12% for investment-grade bonds.

Q3: How does yield relate to bond prices?
A: Yield and price have an inverse relationship - when yields rise, bond prices fall, and vice versa.

Q4: Are there limitations to this formula?
A: This simplified formula assumes annual coupon payments and doesn't account for reinvestment risk or callable features.

Q5: Should this be used for tax-exempt bonds?
A: For tax-exempt bonds, after-tax yield calculations would be more appropriate.