One of the more conservative investment strategies available is to purchase an instrument such as a certificate of deposit or fixed-rate annuity that enables investors to trade lower risk for a relatively low, but known, rate of return. You can evaluate this type of investment using the future value, or FV, function.
- View Offline
- Exercise Files
- [Voiceover] One of the more common…investment strategies available…is to purchase an instrument such as…a certificate of deposit, or a fixed rate annuity,…that enables you to trade lower risk…for a relatively low, but known, rate of return.…You can evaluate this type of investment…using the Future Value, or fv, function.…I'll show you how to use that function,…and my sample file is FV_03_01,…which you can find in the chapter three folder…of the exercise files collection.…When you want to calculate the Future Value…of an investment, that is,…how much something will be worth…after the investment has run its course…and interest and other payments have been accrued,…then you use the fv function.…
That takes the following five arguments.…The first three are required, the last two are optional.…The first is the Annual Percentage Rate.…You will often divide this by 12,…in case of monthly compounding.…The number of Periods, which in this case,…is the number of years, or five.…Payment, which is the periodic payment…that you put into the investment.…
- 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 prices and yields of securities with odd periods
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. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
- Mark as unwatched
- Mark all as unwatched
Are you sure you want to mark all the videos in this course as unwatched?
Take notes with your new membership!
Type in the entry box, then click Enter to save your note.
1:30Press on any video thumbnail to jump immediately to the timecode shown.