When you invest in a security that pays interest, you can receive your interest payments in one of two ways: periodically, or all at once when the security matures. Excel has a function for each of those cases: ACCRINT to find accrued interest that’s paid periodically, and ACCRINTM to find interest that’s paid in a lump sum when the security matures.
- [Narrator] When you invest in a security…that pays interest,…you can receive your interest payments in one of two ways.…Periodically, or all at once…when the security matures.…Excel has a function for each of those two cases.…A-C-C-R-I-N-T to find accrued interest…when it's paid periodically,…and A-C-C-R-I-N-T-M to find interest…that's paid in a lump sum when the security matures.…You can distinguish the two functions…by remembering that the M…at the end of A-C-C-R-I-N-T-M,…stands for at maturity.…
To demonstrate how to use these two functions,…I will use the AccruedInterest_01_06 workbook…which you can find in the Chapter One folder…of your exercise files collection.…In this case, we are looking at a bond,…and let's say that the bond had an issue date…of June 1st, 2016,…a first interest date,…first interest payment of 9/1/2016,…September 1st,…and a settlement date,…that is the day that you take possession of the bond,…of July 1, 2016.…
Furthermore, we know that the annual percentage rate…that the bond pays is five percent.…
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- 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
- Analyzing simulation results
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. Analyzing Simulation Results
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