A coupon bond is paid on a regular schedule, either one, two, or four times a year. After you take possession of the bond, you can calculate the number of coupon payments you’ll receive from your settlement date to the bond’s maturity date. You can find that value by using the COUPNUM function. Calculating the number of coupon payments you’ll receive lets you manage your cash flow more effectively.
- [Voiceover] A coupon bond pays interest…on a regular schedule with payments coming…either one, two, or four times a year.…After you take possession of the bond,…you can calculate the number of coupon payments…you'll receive from your settlement date…to the bond's maturity date.…You can find that value by using…the coupon number function.…I'll show you how to use that function.…My sample file is NumberOfCoupons_04_05,…and you can find it in the chapter four folder…of the exercise files collection.…
In this case, we need to know four things…to calculate the number of coupons…over the life of the bond.…The first is the settlement date,…and that is the date that you actually take possession…of the bond.…Next is the maturity date.…That is the date the bond is set to end,…and it's the date on which interest stops accumulating…and you are then, in a couple of weeks,…returned your principal payment…as well as any interest.…Next is the coupon frequency.…
That is the number of coupon payments per year,…and that can either be annually for one,…
- Define NPER.
- Determine the appropriate method of depreciation to use on tax returns.
- Recall which function is used to evaluate a fixed-rate investment or an annuity that makes periodic payments to the beneficiary.
- Identify the term for the rate of return earned from a zero-risk investment.
- Explain the purpose of the XNPV function.
- Recognize the type of bond that pays interest before it matures.
- Name three arguments needed to use the TBILLYIELD function.
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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