Coupon bonds pay at regular intervals, either one, two, or four times a year. Excel 2016 includes the COUPDAYSNC function, which calculates that value for you. When you own a coupon bond, you’ll receive a payment every time a coupon comes due. If you know how many days it will be before you get paid, you can manage your cash flow more effectively.
- [Narrator] Coupon bonds pay interest…at regular intervals: either one, two,…or four times a year.…Excel 2013 includes a function…that lets you calculate the number of days…until the next coupon.…I will demonstrate how to perform that calculation…using the DaysToNextCoupon_04_03 sample file…which you can find in the Chapter04 folder…of your Exercise Files collection.…To calculate the number of days to the next coupon,…I need to know four things.…The first is the settlement date.…That's in C3.…And that's the date that you take possession…of the security.…
Next is the maturity date.…That is the date that the security ends its run.…And a couple of weeks later you'll receive…your principal plus accumulated interest.…Next is coupon frequency.…That's the number of coupons…that are distributed per year.…So in other words, you'll get interest…either one, two, or four times a year.…If it's one time a year,…that is an annual coupon.…Two times a year is semi-annual.…And four times a year is quarterly.…And finally, we have basis.…
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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
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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