One common type of investment is a bond that pays interest at maturity. You're borrowing money by selling bonds rather than stock, so you need to know the break even price, which is the minimum to charge investors. If you create one of these bonds, you can calculate its price per $100 of redemption value by using the PRICEMAT function.
- [Instructor] One common type of investment…is a bond that pays interest at maturity.…If you create one of these bonds,…you can calculate its break-even price…per $100 of redemption value…by using the priceMAT function.…In this movie I'll show you how to create this calculation.…My sample file is InterestAtMaturity_05_06,…and you can find it in the Chapter05 folder…of your exercise files collection.…I have all the information that I need…for this particular calculation in my worksheet.…I'll just review it quickly.…
The first is the settlement date,…and that is the date that the investor…actually takes possession of the security.…Next is the maturity date,…and that is the date that the investment ends…and the investors are paid off.…Next is the issue date,…and that is the date…that the investment was actually created.…And you'll see here that in this case,…it's different from the settlement date.…So we're assuming that another investor bought the issue,…the date that it came out,…and then sold it to another investor.…
- 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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