Some investments mention all the parameters you need to evaluate it—except for the discount rate. In this video, learn how to calculate the discount rate of a security.
- [Instructor] Evaluating a bond is easy … when you know the discount rate … that is applied to your purchase, … in other words, how much of a discount you're getting … over the face value of the investment. … If you don't know an investment's discount rate … but you do know other facts about it, … you can use the DISC or discount function … to find its discount rate. … My sample file is DiscountRate_05_05, … and you can find it in the Chapter05 folder … of your Exercise Files collection. … In the context of a bond, … the discount rate is the discount you're getting … off of purchase, so it doesn't refer to the discount rate. … That is the assumed safe amount … that you can get in return on an investment. … So for example, the safe rate of investment might be 3% … because you assume the discount rate … for U.S. Treasury bonds is around three to 3.2%. … In this case, we're looking at the discount … off of the redemption value. … To find the discount rate, … you need to know a number of things. …
Note: This course was recorded in Office 365, but anyone using a recent version of Excel—including 2019, 2016, and some earlier versions—will be able to follow along.
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating security yields
- Evaluating the yields of securities with odd periods
Skill Level Intermediate
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
Excel: Introduction to Macros and VBAwith Chris B. Smith37m 42s Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculate Depreciation
3. Determining Values and Rates of Return
4. Calculate Bond Coupon Dates and Security Durations
5. Calculate Security Prices and Rates
6. Calculate Security Yields
7. Evaluate Securities with Odd First or Last Periods
Next steps1m 7s
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