Join Curt Frye for an in-depth discussion in this video PRICE: Calculating the price of a security that pays periodic interest, part of Excel 2010: Financial Functions in Depth.
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 paid to an investor every time a coupon is due.…
- 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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