Some bonds pay interest throughout the bond’s life, while others only pay interest when the bond matures. If you receive the accumulated interest in one payment at maturity, you can use the YIELDMAT function to find the bond’s yield. The annual yield represents the total increase in value during one year. You can use that value to compare this investment with others you’re considering.
- [Voiceover] Some bonds pay interest…throughout the bond's life while others only pay interest…when the bond matures.…If you receive the accumulated interest…in one payment at maturity, you can use…the YIELDMAT function to find the bond's yield.…I'll demonstrate how to create that formula…and my sample file is YieldAtMaturity_05_12.…You can find it in the chapter five folder…of the exercise files collection.…We need to know six different things…to calculate the yield at maturity for an investment.…The first is the settlement date,…and that is the date that you actually take possession…of the security.…
Next is the maturity date.…That is when the original principal…and any accumulated interest is returned to the purchaser.…Next is the issue date, and that is the date…that the investment was created.…And it might be different from the settlement date.…That might occur if a bond went unsold…on its original issue date or if someone who bought…the bond initially decides to sell it later.…Next is the rate, and that is the annual yield…
- 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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