When you evaluate a Treasury bill, you’ll occasionally know the start date, end date, and price, but not the yield. If you know those first three values, you can calculate the yield by using the TBILLYIELD function. If the formula returns an error, check your settlement date and maturity date. T-bills have a life of one year or less, so you might have entered a date incorrectly.
- [Instructor] When you evaluate a treasury bill,…you will occasionally know the start date,…end date and price, but not the yield.…If you know those first three values,…you can calculate the yield using…the T-Bill Yield function.…I'll demonstrate how to use the function,…and my sample file's TBillYield_05_09,…which you can find in the Chapter 5 folder…of your exercise file's collection.…There are three bits of information…that you need to know, those are the…settlement date, which is the date…that you take possession of the security,…next is the maturity date, that's the date…that the investment comes to an end,…and you've earned the payout.…
And finally, there's the price.…That is the amount that you pay per $100 of face value,…and that's why I have this fourth line here,…Face value of 100, and they're in italics.…I put it there just to remind you…what the face value of the investment is,…in other words, the amount you…get paid on the maturity date,…but it's not actually used in the formula.…Another thing to note is that the settlement date…
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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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