Bonds that pay interest prior to maturity are known as coupon bonds. When you purchase a bond, you should know how long you’ll have to wait to receive your first interest payment. Calculating the number of days between a coupon period’s beginning and the settlement date gives you valuable information on how soon you’ll start seeing a return on your investment.
- [Instructor] Bonds that pay interest prior to maturity…are known as coupon bonds.…When you purchase a bond,…you should know how far into…a coupon period you're buying the bond,…so you can tell how long you'll have to wait…to receive your first interest payment.…In this movie I will show you how to calculate…the number of days til the next coupon payment.…My sample file is CouponDays_04_01…and you can find it in the chapter four folder…of your exercise files collection.…I need to know four different bits of information…to calculate the amount of time between two coupon days.…
The first is the settlement date…and that is the date that…you take possession of the security.…Next is the maturity date,…that is the date that the bond ends its run…and returns the principal and accumulated interest to you.…Next is the coupon frequency,…that is the number of coupons per year…and that number can either be…zero, one, two, or four.…And that is zero coupon or no coupons,…annual, semi-annual, or quarterly.…There is no setting for three.…
- 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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