Excel has many functions that let you evaluate your investments. If you buy a bond at a set price and receive a payment when the instrument matures, you are said to be fully invested. If the bond’s prospectus doesn’t list the investment’s annual interest rate, you can find it by using the INTRATE function.
- [Instructor] Excel comes with many functions…that you can use to evaluate your investments.…If you buy a bond at a set price and receive a payment,…when the instrument matures,…you are set to be fully invested.…If the bond's prospectus doesn't list…the investments annual interest rate…you can find it by using the int rate function.…I'll demonstrate how to do that in this movie.…My sample file is InterestRate_05_02…and you can find it in the chapter five folder…of your exercise files collection.…To evaluate this investment you need to know…five different pieces of information.…
The first is the settlement date…and that is the date that you actually take possession…of the security.…Next is the maturity date, that's in cell C5,…and that's when the investment ends…and you receive the redemption value.…C6 lists the investment,…that's the amount of money you're expected to put up.…C7 has the redemption value,…that's the amount of money you get back,…and then basis is how you evaluate the calendar.…I'll describe that more in a second.…
- 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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