PRICE: Calculating the price of a security that pays periodic interest


show more PRICE: Calculating the price of a security that pays periodic interest provides you with in-depth training on Business. Taught by Curt Frye as part of the Excel 2010: Financial Functions in Depth show less
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PRICE: Calculating the price of a security that pays periodic interest

If your company needs to raise some cash and has determined that issuing stock isn't in its best interests, you might borrow money by issuing bonds. Pricing bonds for sale is a very tricky business. In essence you're betting that you can earn a higher rate of return on the borrowed money than you pledged to pay your bond holders. Once you know the parameters of the bond you'd like to issue you can use the PRICE function to find the break even issue price. The PRICE function has seven arguments and those are settlement date here in B3, maturity date in B4, percent coupon in B5, yield in B6, redemption value B7, frequency in B8 and basis in B9.

The settlement date is the date that you gain ownership of the security. That date might be different from the bond's issuance date, which is the date the bond is made available for sale. The maturity date is the date the bond will be paid off. The percent coupon is the bonds interest rate that is used to determine how much money is ...

PRICE: Calculating the price of a security that pays periodic interest
Video duration: 3m 19s 2h 18m Intermediate

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PRICE: Calculating the price of a security that pays periodic interest provides you with in-depth training on Business. Taught by Curt Frye as part of the Excel 2010: Financial Functions in Depth

Subjects:
Business IT
Software:
Excel
Author:
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