A coupon bond is paid on a regular schedule, either one, two, or four times a year. After you take possession of the bond, you can calculate the calendar date your first coupon payment is due by using the COUPNCD function. When you own a coupon bond, you’ll receive a payment every time a coupon comes due. Calculating the date your first comes due will let you manage your cash flow effectively.
- [Narrator] When you invest in a coupon bond…that means that interest is paid on a regular basis.…Those coupon payments can occur…either one, two, or four times a year.…After you take possession of the bond…you can calculate the calendar date…of your first coupon payment by using the COUPNCD function.…I'll demonstrate how to perform that calculation.…My sample file is the DateNextCouponIsDue_04_04 workbook…which you can find in the chapter four folder…of your exercise files collection.…
I have four different pieces of information that I need.…The first is the Settlement date that's in cell C3.…And that's the date that you actually…take possession of the security.…Next is the Maturity date,…that is the date the investment ends…and you get your principal…and any accrued interest returned to you.…Coupon frequency is the number of coupon payments per year.…That can be annually, which is one.…Semiannually, which is two.…Or quarterly, which is four.…And then finally there is Basis,…which is how Excel looks at the calendar.…
- 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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