Join Curt Frye for an in-depth discussion in this video DURATION: Calculating the annual duration of a security, part of Excel 2010: Financial Functions in Depth.
Comparing coupon bonds with different investment periods can be difficult.…However, there is a method that you can use to calculate a common value that…let's you evaluate a bond based on its sensitivity to changes in its yield.…In Excel, you implement that method using the DURATION function.…To calculate duration, you need to know the following six things.…The first of those is the settlement date and that is the date that you purchase…and gain control of the investment.…Second is the maturity date and that is the date that the bond investment ends…and you are paid any proceeds due to you.…
Then next is the coupon interest.…A coupon bond pays interest prior to the bond's maturity date.…So, you can receive interest payments per coupon either annually, which…is once a year, semiannually, which is twice a year, or quarterly, which is four times a year.…Next is the yield and the yield is the interest on the bond itself.…So, as distinct from the coupon interest, the yield is the interest that is used…
- Analyzing loans, payments, and interest
- Discovering the interest rate of an annuity
- Determining depreciation using the straight line, declining balance, double-declining balance, and other methods
- Calculating the future value of an investment with variable returns
- Finding the discount rate of a security
- Converting between fractional prices and decimal prices
- Determining the yield of securities that pay interest periodically
Skill Level Intermediate
Managing and Analyzing Data in Excel 2010with Dennis Taylor1h 32m Appropriate for all
Excel 2010: Data Validation in Depthwith Dennis Taylor59m 45s 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. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 5s
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