Bonds that pay interest prior to maturity are known as coupon bonds. When you purchase a bond, you should know how long you’ll have to wait to receive your first interest payment. Calculating the number of days between a coupon period’s beginning and the settlement date gives you valuable information on how soon you’ll start seeing a return on your investment.
- [Voiceover] Bonds that pay interest prior to maturity…are known as coupon bonds.…When you purchase a bond you should know…how far into a coupon period you are…so that you know how long you'll have to wait…until you get your next payment.…Or if you've just bought the bond, your first payment.…One of the reasons that it's important to know…how often you'll get paid and when you'll get paid…is that there's a time value of money factor.…Based on inflation, money becomes worth less…as time goes by.…In this movie, I will show you how to calculate…the number of days until the next coupon payment.…
My sample file is Coupon Days 0401…and you can find it in the Chapter Four Folder…of your Exercise Files Collection.…I need four arguments for this calculation,…the first is a settlement date,…and that is the date that you actually take possession…of the security, call it a bond.…Next, you have the maturity date.…That is the date when the bond stops earning interest…and then usually a couple of weeks after that…you'll receive your money.…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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