When you’re offered a discounted security, you might know everything about the investment except for its annual yield. If so, you can find that yield by using the YIELDDISC function. Finding a discounted security’s yield lets you compare it to other potential investments, which helps you make sound investment decisions.
- [Voiceover] When you're offered a discounted security,…you might know everything about the investment…except for its annual yield.…If so, you can find that yield…by using the YIELDDISC Function.…I'll demonstrate the arguments that you need…and how to use the function in this movie.…My sample file is DiscountedSecurityYield_05_11,…and you can find it in the Chapter 5 folder…of your Exercise Files collection.…We need to know five pieces of information…for the arguments of the function.…Those are the Settlement date,…and that is the date that you, the buyer,…take possession of the investment.…
Next is the Maturity date.…That is the date that the investment's original principle…and accumulated interest come due.…Next is the Price and that is what you pay…to invest in the security.…Next is the Redemption value, or face value.…And finally, there is the Basis,…and Basis is how you look at the calendar.…I'll give a bit more information about that…as I create the formula.…Everything appears to be in place,…so I'll go down to Cell C9, and I'll create my formula.…
- Define NPER.
- Determine the appropriate method of depreciation to use on tax returns.
- Recall which function is used to evaluate a fixed-rate investment or an annuity that makes periodic payments to the beneficiary.
- Identify the term for the rate of return earned from a zero-risk investment.
- Explain the purpose of the XNPV function.
- Recognize the type of bond that pays interest before it matures.
- Name three arguments needed to use the TBILLYIELD function.
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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