When you invest in a coupon bond, you can evaluate your investment more accurately if you know the number of days in the coupon period. To find that value, you can use the COUPDAYS function. Knowing the number of days in a coupon period helps you evaluate your investment. Always be sure that you’re using the correct basis—if you’re not, the formula could give you an unintended result.
- [Instructor] When you invest in a coupon bond,…that is, a bond that pays interest during the bond's life,…you can evaluate your investment more accurately…if you know the number of days in the coupon period.…To find that value, you can use the coupdays,…C-O-U-P-D-A-Y-S function.…To demonstrate how to use that function, I will use…the DaysInSettlementPeriod_04_02 sample file,…which you can find in the Chapter Four folder…of the Exercise Files collection.…In this case I have four bits of information that I need.…The first is the settlement date.…
That's the date that you take possession of the security,…that's in C3.…Maturity date is when the investment ends and all…principle and accrued interest is returned to you.…That's in C4.…C5 is the number of coupons you get per year,…the coupon frequency.…That can be one, two or four.…And then the basis, which is how Excel looks at the calendar…is in cell C6.…I'll go into more detail on the basis when we get to that…part of the formula.…So I'll go ahead and click in cell C9,…
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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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