Treasury bills are popular investments, as are bonds. If you want to compare a T-bill’s yield to a bond’s yield, you can do so using the TBILLEQ function. T-bills and bonds might seem like equivalent investments, but they’re not. You can compare those two types of investments by converting a T-bill yield to a bond yield using the TBILLEQ function.
- [Instructor] Treasury Bills are popular investments…as are bonds.…If you want to compare T-Bills yield to a bonds yield,…you can do so using the TBILLEQ function.…I'll demonstrate how to perform this comparison…using the BondEquivalentYield_05_07 sample file…which you can find in the chapter five folder…of your exercise files collection.…To perform the analysis,…you only need to know three things.…The first is the settlement date.…That's the date that you take possession…of this particular T-Bill.…
Next is the maturity date…and that is the date that the T-Bill ends.…And one thing to note, is that by definition,…a bill, as opposed to a bond,…has a life of less than one year.…So, what I have here are two dates.…The settlement date of May 1st…and the maturity date of December 31st of the same year.…If I were to make this maturity date 12/31/2017,…then the formula that I'm going to create…would return an error.…And finally there's the discount rate…and that is the amount of return…that you can get from a risk-free investment.…
Author
Curt Frye
Released
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- Recall what the type argument is used to determine when using the PMT function.
- Identify what the M stands for in the ACCRINTM function.
- Name the accounting rules used by the AMORDEGRC function to assign a depreciation coefficient to an asset.
- Recall what internal rate of return generated by the IRR function should be measured against to determine if it is a good investment.
- List the three regular intervals that coupon bonds pay interest at.
- Determine the function that provides a more conservative bond evaluation compared to the DURATION function.
- Explain what the RECEIVED function shows.
Skill Level Intermediate
Duration
Views
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Introduction
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Welcome58s
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1. Analyzing Loans, Payments, and Interest
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2. Calculating Depreciation
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3. Determining Values and Rates of Return
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4. Calculating Bond Coupon Dates and Security Durations
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5. Calculating Security Prices and Yields
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6. Analyzing Simulation Results
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Conclusion
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Next steps1m 12s
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Video: Calculating the bond-equivalent yield for a Treasury bill (TBILLEQ)