One common type of investment is a bond that pays interest at maturity. You're borrowing money by selling bonds rather than stock, so you need to know the break-even price, which is the minimum to charge investors. If you create one of these bonds, you can calculate its price per $100 of redemption value by using the PRICEMAT function.
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- Exercise Files
- [Voiceover] One common type of investment…is a bond that pays interest at maturity.…If you create one of these bonds,…you can calculate its price…per 100 dollars of redemption value…by using the price M-A-T function.…In this movie, I will use the…Interest at Maturity 0506 sample file,…and that's a workbook you can find…in the Chapter Five folder of the exercise files archive.…To calculate the price that you need to charge…to break even on this type of investment,…you need to know six pieces of information.…The first is the settlement date,…and that is the date that a buyer…actually takes possession of the bond.…
Next is the maturity date.…That's the date when the bond comes due,…and the original principal,…and the accumulated interest are paid out.…Next is the issue date,…and that's the date that the bond was actually created.…It can be different than the settlement date,…and it always is if there's a secondary market.…In other words, if the original purchaser…resells the bond later.…Next there's the rate,…and that is the rate that's paid out of interest…
- 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
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