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What does Coupon Rate mean?
 
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The coupon rate is the annual interest rate paid on a bond. It is represented as a percentage of the bond's face value. This video provides a brief explanation of what coupon rate means, and provides a visual example of how it is typically used and calculated. Learn more at: http://marketbusinessnews.com/financial-glossary/coupon-rate/
Views: 3555 Market Business News
Relationship between bond prices and interest rates | Finance & Capital Markets | Khan Academy
 
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Why bond prices move inversely to changes in interest rate. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 465521 Khan Academy
Bonds  Calculate Coupon Rate
 
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how to calculate coupon rate on a bond examples using excel and financial calculator
Views: 16255 Elinda Kiss
What is a Coupon
 
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In the financial world, “coupon” represents the interest rate on a bond. Typically the coupon is paid semi-annually. Coupon is short for “coupon rate” or “coupon percentage rate.” The use of the word coupon to describe the interest rate on a bond is derived from the fact that bonds used to be issued in physical, paper, form. Attached to the bonds were coupons that had to be removed from the bond and redeemed with the issuer in order to receive the interest payment. Bond owners literally had to “clip” the coupon off the bond. Coupon is sometimes used in reference to retired investors who have most of their wealth in fixed income securities and spend their retirement years clipping coupons. for more info: ttps://www.facebook.com/groups/478665558952936/
Views: 10197 Investment for Life
Why Bond Prices and Yields are Inversely Related
 
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Help us make better videos: http://www.informedtrades.com/donate Trade stocks and bonds with Scottrade, the broker Simit uses: http://bit.ly/scottrade-IT (see our review: http://bit.ly/scottrade-IT2) KEY POINTS 1. Bond prices and bond yields move in opposite directions. When bond prices go up, that means yields are going down; when bond prices go down, this means yields are going up. Mathematically, this is because yield is equal to: annual coupon payments/price paid for bond A decrease in price is thus a decrease in the denominator of the equation, which in turn results in a larger number. 2. Conceptually, the reason for why a decrease in bond price results in an increase bond yields can be understood through an example. a. Suppose a corporation issues a bond to a bondholder for $100, and with a promise of $5 in coupon payments per year. This bond thus has a yield of 5%. ($5/$100 = 5%) b. Suppose the same corporation then issues additional bonds, also for $100 but this time promising $6 in coupon payments for year -- and thus yielding 6%. No rational investor would choose the old bond; instead, they would all purchase the new bond, because it yielded more and was at the same price. As a result, if a holder of the old bonds needed to sell them, he/she would need to do so at a lower price. For instance, if holder of the old bonds was willing to sell it at $83.33, than any prospective buyer would get a bond that earned $5 in coupon payments on an $83.33 payment -- effectively an annual yield of 6% (5/83.33). The yield to maturity could be even higher, since the bond would give the bondholder $100 upon reaching maturity. 3. The longer the duration of the bonds, the more sensitivity there is to interest rate moves. For instance, if interest rates rise in year 3 of a 30 year bond (meaning there are 27 years left until maturity) the price of the bond would fall more than if interest rates rise in year 3 of a 5 year bond. This is because an interest in interest rates reduces the relative appeal of existing coupon payments, and the more coupon payments that are remaining, the more interest rate fluctuations will impact the price of the bond. 4. Lastly, a small note on jargon: when investors or commentators say, "bonds are up," (or down) they are referring to bond prices. "Bonds are up" thus means bond prices are up and yields are down; conversely, "bonds are down" means bond prices are down and yields are up.
Views: 54603 InformedTrades
Face value, Coupon and Maturity of Bonds - SmarterWithMoney
 
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Investing in bonds can be tricky in today's market. Understanding the fundamental concepts associated with bonds is a good place to start.
Views: 20694 Religare
How to Price/Value Bonds - Formula, Annual, Semi-Annual, Market Value, Accrued Interest
 
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http://www.subjectmoney.com http://www.subjectmoney.com/definitiondisplay.php?word=Bond%20Pricing In this video we show you how to calculate the value or price of a bond. We teach you the present value formula and then use examples to discount the coupon payments and principle payment to their present value. We also show you how to solve the price of a semi-annual bond. In this case you would multiply the periods by two and divide the YTM and coupon payments by 2. We also show you how to solve the accrued interest of a bond to find out what it would sell for at a date that is not on the exact coupon payment date. https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=7zCqoED8MVk http://www.roofstampa.com hjttp://roofstampa.com http:/www.subjectmoney.com http://www.excelfornoobs.com
Views: 75983 Subjectmoney
Khan Academy - Bond Prices and Interest Rates
 
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Khan Academy on Bond Prices and Interest Rates
Views: 147962 Jonathan Horn
Accrued interest (clean versus dirty bond price)
 
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The full price of a bond, transacting between buyer and seller, includes accrued interest (the fraction of the next coupon earned by the seller). Full price (a.k.a, dirty or invoice) - Accrued interest = Clean Price.
Views: 34974 Bionic Turtle
Bonds and Bond Yields
 
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Bonds and Bond Yields. A video covering Bonds and Bond Yields Instagram @econplusdal Twitter: https://twitter.com/econplusdal Facebook: https://www.facebook.com/EconplusDal-1651992015061685/?ref=aymt_homepage_panel
Views: 23187 EconplusDal
3 Minutes! Bond Valuation Explained and How to Value a Bond
 
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OMG wow! Clicked here http://mbabullshit.com I'm shocked how easy, bond valuation video.. What is a Bond? Basically, a bond is a certificate which proves that a company borrowed money from you and now owes you money. Owning a bond is a way to earn interest payments instead of putting your money in a bank. Therefore, if a bond can give you high interest coupon payments compared to bank interest payments, a bond value should be high. On the other hand, if a bond will give you small coupon payments compared to bank interest, the bond value should be low. A bond can be bought either from the original company which issues the bond, or from people who already bought the bond from the corporation, but who want to sell the bond before it expires because they don’t want to wait too long before they get back their original investment So to find the theoretical value of a bond, we need to think about the bond’s interest coupon payments compared to bank interest payments, the bond’s face value, and the length of time before maturity when you get back the full face value of the bond. Sears Bond photo credit: Tom Spree via Wikipedia Creative Commons
Views: 76703 MBAbullshitDotCom
Zero Coupon Bond
 
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An example of pricing a zero-coupon bond using the 5-key approach.
Views: 34985 Kevin Bracker
Relationship between Bond Price & Interest Rate
 
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This video will help you understand the relationship between interest rate and the value of a bond. This video will clear your logic for why is it negative for the bond market when interest rate rises. Why is there an inverse relationship Interest Rate & Bond Price. Please leave us a comment/suggestion on our video and do hit "LIKE" if you like the video. SUBSCRIBE TO OUR CHANNEL FOR FULL ACCESS TO ALL OUR VIDEOS ABOUT US: Ambition Learning Solutions is a preemptive training institute providing trainings to undergraduates, post graduates and working professionals on various international certification programs like Certified Financial Planner (CFP), Certified Credit Research Analyst (CCRA), Basics of Financial Markets, Macro Economic Indicators impacting the Financial Markets, Derivatives Market, Technical Analysis, Credit Research, Commercial Banking, Investment Banking, Financial Modeling, Advance Excel, Equity Research, Diploma in Banking and Finance (DBF), NSE's Certified Capital Market Professional (NCCMP) etc. We assist corporate by providing qualified human resources for their operation and expansion requirement. We train their existing staff to furnish them with the latest updates and techniques in their respective domains. Reach us at: Website: www.ambitionlearning.com Facebook: https://www.facebook.com/groups/ambitionlearning/ Email: [email protected] Linkedin: http://www.linkedin.com/profile/view?id=67196015&trk=wvmp-profile
Explaining Bond Prices and Bond Yields
 
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​In this revision video we work through some numerical examples of the inverse relationship between the market price of fixed-interest government bonds and the yields on those bonds. ​Government bonds are fixed interest securities. This means that a bond pays a fixed annual interest – this is known as the coupon The coupon (paid in £s, $s, Euros etc.) is fixed but the yield on a bond will vary The yield is effectively the interest rate on a bond. The yield will vary inversely with the market price of a bond 1.When bond prices are rising, the yield will fall 2.When bond prices are falling, the yield will rise - - - - - - - - - MORE ABOUT TUTOR2U ECONOMICS: Visit tutor2u Economics for thousands of free study notes, videos, quizzes and more: https://www.tutor2u.net/economics A Level Economics Revision Flashcards: https://www.tutor2u.net/economics/store/selections/alevel-economics-revision-flashcards A Level Economics Example Top Grade Essays: https://www.tutor2u.net/economics/store/selections/exemplar-essays-for-a-level-economics
Views: 29513 tutor2u
Investopedia Video: Zero-Coupon Bond
 
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A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. For more Investopedia videos, check out; http://www.investopedia.com/video/
Views: 46092 Investopedia
Bonds - Coupon and Market Rates Differ
 
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Lesson discussing how the value of a bond changes when coupon rates and market rates differ. Looks at why a bond will trade at a premium, discount, or at par For more questions, problem sets, and additional content please see: www.Harpett.com. Video by Chase DeHan, Assistant Professor of Finance at the University of South Carolina Upstate.
Views: 3253 Harpett
Calculating the Yield of a Zero Coupon Bond
 
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This video demonstrates how to calculate the yield-to-maturity of a zero-coupon bond. It also provides a formula that can be used to calculate the YTM of any zero-coupon bond. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 29284 Edspira
Introduction to the yield curve | Stocks and bonds | Finance & Capital Markets | Khan Academy
 
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Introduction to the treasury yield curve. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/relationship-between-bond-prices-and-interest-rates?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-bonds?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 335183 Khan Academy
Zero Coupon Bonds
 
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Why buy a bond that pays no interest? This video helps you understand what a zero coupon bond is and how it can be beneficial. It details when you should expect to receive a return after buying a zero coupon bond and some of its unique features. Questions or Comments? Have a question or topic you’d like to learn more about? Let us know: Twitter: @ZionsDirectTV Facebook: www.facebook.com/zionsdirect Or leave a comment on one of our videos. Open an Account: Begin investing today by opening a brokerage account or IRA at www.zionsdirect.com Bid in our Auctions: Participate in our fixed-income security auctions with no commissions or mark-ups charged by Zions Direct at www.auctions.zionsdirect.com
Views: 31412 Zions TV
Bonds | Confused between the rates: Spot, Forward, Coupon, Current Yield, IRR, YTM, BEY
 
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CFA | FRM | SFM | Excel Live Classes | Videos Available Globally For Details: www.aswinibajaj.com WhatsApp: +91 9831149876 or https://api.whatsapp.com/send?phone=919830497377&text=Want%20to%20know%20more%20about%20classes & we shall get back to you. E-mail: [email protected] Hope you had a great learning experience! Do Like and Subscribe! And check our other videos on Finance (CFA, FRM, SFM), Resume making, Career options, etc. Click to access playlist. https://www.youtube.com/channel/UCyt8... Thank you.
Views: 7337 ASWINI BAJAJ
Calculating the Yield of a Coupon Bond using Excel
 
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UPDATE: You can also find the YTM by trial and error. If you plug in 0.06 for the YTM in the equation this gives you $91,575, which is lower than $92,227. YTM = 0.058 gives you $92,376, which is a little bit higher than $92,227. YTM = 0.0585 gives you $92,175, but YTM = 0.0584 gives you $92,215 which is very close to $92,227. Thus, 5.84% is the approximate YTM This video explains how to calculate the yield-to-maturity of a coupon bond. A comprehensive example is provided that shows the formula for calculating the yield, but the video also provides a Microsoft Excel formula that provides an easier means of determining the yield. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 67214 Edspira
How to Amortize a Bond Discount
 
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This video explains how to account for bonds issued at a discount using the effective interest rate method for bond discount amortization. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 86810 Edspira
Investopedia Video: Bond Yields - Current Yield and YTM
 
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The current yield and yield to maturity (YTM) are two popular bond yield measures. The current yield tells investors what they will earn from buying a bond and holding it for one year. The yield to maturity (YTM) is the bond's anticipated return if held until it matures.
Views: 82484 Investopedia
The Differences Between Coupon, Yield and Expected Return
 
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Many investors believe the terms coupon, yield and expected return are interchangeable when it comes to bonds and other fixed income investments. Buckingham Fixed Income Advisor Jared Kizer discusses the important differences among these terms.
Zero Coupon Bonds
 
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This narrated PPT describes how a zero coupon bond works, along with an example of how to calculate the yield to maturity. We contrast the yield to maturity with the bond equivalent yield.
Views: 21226 Elizabeth Schmitt
Coupon Bond Valuation: Basics
 
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Valuing a Coupon Bond. This is an extension of the previous video on "What is a Bond?" A knowledge of the time value of money is necessary. For more questions, problem sets, and additional content please see: www.Harpett.com. Video by Chase DeHan, Assistant Professor of Finance at the University of South Carolina Upstate.
Views: 2433 Harpett
Bonds | YTM | INTEREST RATES | COUPON | YIELD | HINDI
 
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This video will help in understanding various topics like Bonds, Interest rates, YTM, Coupon Rate, Maturity, Yields, Relation of Interest rates with Bond Price
Views: 11 GeekDonkey
Coupon Bond Price
 
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Calculate the price of a coupon bond.
Views: 11479 John Redden
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial will show you how to calculate bond pricing and valuation in excel. This teaches you how to do so through using the NPER() PMT() FV() RATE() and PV() functions and formulas in excel. To follow along with this tutorial and download the spreadsheet used and or to get free excel macros, keyboard shortcuts, and forums, go to: http://www.TeachMsOffice.com
Views: 165025 TeachExcel
How to calculate the bond price and yield to maturity
 
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This video will show you how to calculate the bond price and yield to maturity in a financial calculator. If you need to find the Present value by hand please watch this video :) http://youtu.be/5uAICRPUzsM There are more videos for EXCEL as well Like and subscribe :) Please visit us at http://www.i-hate-math.com Thanks for learning
Views: 264095 I Hate Math Group, Inc
SFM   BOND VALUATION, YTM & COUPON RATE
 
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SUDARSHAN AGRAWAL CLASSES SFM BOND VALUATION BY CA ASWINI BAJAJ
Views: 14165 SUDARSHAN AGRAWAL
Pricing a Bond with Yield To Maturity, Lecture 013, Securities Investment 101, Video 00015
 
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In this lecture, we price the same standard bond given three different ratings agency ratings, which has given us three different required overall yields to get from the bond, given the changing levels of risk. After explaining the theory of present valuing the different fixed cashflows, we then use an Excel spreadsheet to calculate the three different bond prices. The lecture finishes with an Excel chart which displays the relationships between coupon rate, flat yield, and yield to maturity, as well as highlighting the most important concept in bond trading; when required interest rates go up, bond prices go down, and when required interest rates go down, bond prices go up. For those who wish to know how to calculate a yield to maturity given a market bond price, see the next lecture. Previous: http://www.youtube.com/watch?v=-tN32FU3D_k Next: http://www.youtube.com/watch?v=hHR_GSEisRs For financial education from London to Singapore and beyond, please contact MithrilMoney via the following website: http://mithrilmoney.com/ This MithrilMoney lecture was delivered by Andy Duncan, CQF. Please read our disclaimer: http://mithrilmoney.com/disclaimer/
Views: 36258 MithrilMoney
4 Usual Confusions in Bond Valuation: Tutorial for Bond Value in Valuing Bonds (super easy)
 
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OMG wow! I'm SHOCKED how easy! Clicked here http://www.youtube.com/watch?v=eE-vj43wHOQ No wonder others goin crazy sharing this??? What amount is best to be willing to pay for a bond? A bond's value is driven by impending cash flows you are likely to generate by possessing the bond. Where do the prospective cash flows come from? They come from 1) the coupon payments which symbolize cash earnings for the owner of the bond, and 2) the remuneration of principal ("face value" of the bond).Utilizing the Bond Valuation Formula and presuming a 5% level of interest from a bank, a bond that has a $1,000 face value and 4% coupon rate which might grant you $4 annually for 7 years plus enable you to recoup the $1,000 face value after 7 years should in truth maintain a fair value of $941... which happens to be obviously less than the $1,000 face value. Thus even if the face value is $1,000, you must be prepared to pay a maximum of only $941 to obtain this bond.(The formula is a bit complicated and concerns an abundance of aspects, such as the yield or yield to maturity, remaining time until maturity, not to mention different variables. You ordinarily don't need to actually do calculations by yourself if you're not in business school. There are loads of accessible calculators via the internet.)What exactly does the $941 earlier mentioned suggest? If you should pay more than $941 for this bond, you would be better off depositing your dollars in the bank instead. Put differently, in case you compensate beyond $941, your rate of return for maintaining this bond could possibly be under the bank interest rate of 5%. Consequently... it would be preferable to deposit in the bank.So when a bond is obtained or sold, is it acquired or sold at the face value or at the fair value?For the most part, if it happens to be the first time a bond is being issued and sold by the issuing firm in the primary bond market, it is carried out with the face value. However, in the secondary market, in the event the bond is purchased or sold by unique people, it is exchanged at market value, which is often differ from both the face value and fair value. The market value is basically what true persons are prepared to pay or deal for the bond, whether or not this is much less or greater than the face value and/or fair value. Normally though, the market value is nearer to the fair value than to the face value. Take into account however, that in the secondary market, a large component which impacts bond price is risk as symbolized by its credit rating, and this factor is not covered in the formula used to find out how to value a bond which has been referred to above. http://www.youtube.com/watch?v=eE-vj43wHOQ http://mbabullshit.com/blog/bond-valuation-in-35-minutes/
Views: 76993 MBAbullshitDotCom
Bonds Effective Interest Method - Discount
 
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This video explains how to calculate a bond that sells at a discount. It shows the corresponding journal entries on the original sale and interest payments. It also shows how to prepare the amortization table and explains what the numbers represent.
Views: 21607 mattfisher64
What Happens to My Bonds When Interest Rates Rise?
 
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With interest rate hikes and indications that there will be further increases this year, we've been receiving questions about the impact of rising interest rates on a bond portfolio. In this video, Pure Financial's Director of Research, Brian Perry, CFP®, CFA® answers the question, "what will happen to my bond portfolio when interest rates rise?" If you would like to schedule a free assessment with one of our CFP® professionals, click here: https://purefinancial.com/lp/free-assessment/ Make sure to subscribe to our channel for more helpful tips and stay tuned for the next episode of “Your Money, Your Wealth.” http://bit.ly/2FDSfK2 Channels & show times: http://yourmoneyyourwealth.com https://purefinancial.com IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, Inc. A Registered Investment Advisor. • Pure Financial Advisors Inc. does not offer tax or legal advice. Consult with their tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
FRM: TI BA II+ to compute bond yield (YTM)
 
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Given four inputs (price, term/maturity, coupon rate, and face/par value), we can use the calculator's I/Y to find the bond's yield (yield to maturity). For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 103887 Bionic Turtle
Session 07: Objective 1 - Bonds and Bond Valuation
 
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The Finance Coach: Introduction to Corporate Finance with Greg Pierce Textbook: Fundamentals of Corporate Finance Ross, Westerfield, Jordan Chapter 7: Interest Rates and Bond Valuation Objective 1 - Key Objective: Bonds Bond Cycle Inverse relationship between bond value and interest rate Face Value vs. Discount vs. Premium Bond To minimize interest rate risk purchase a bond with 1) shorter time to maturity 2) higher coupon rate Semiannual vs. Annual Coupons Bond Value Formula Coupon (C) Time to Maturity (t) Yield to Maturity (r) Face value paid at maturity (FV) Fisher Effect (Exact vs. Approximate) Nominal Rate (R) Real Rate (r) Inflation Rate (h) More Information at: http://thefincoach.com/
Views: 33554 TheFinCoach
PV of semiannual coupon bonds in Excel
 
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For bonds that pay interest on a semiannual basis, we have to adjust the number of periods (multiply times 2), the yield (divide by 2), and the coupon payment (divide by 2).
Views: 2932 pjcalafi
Bond Valuation part 1
 
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Views: 83030 Rahul Malkan
Calculating the Forward Rate
 
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This video shows how to calculate the Forward Rate using yields from zero-coupon bonds. A comprehensive example is provided along with a formula to show how the Forward Rate is computed based on zero-coupon yields. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 64414 Edspira
Bond maturity and duration
 
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Bond maturity and duration Duration vs. maturity Because interest rate risk is perhaps your most important consideration in bond investing, and since interest rate risk increases with longer-term bonds, looking at the maturity date of a bond is one way to measure risk in bond investments. But instead of looking only at maturity dates, many bond investors look at something called the duration of a bond to further quantify their interest rate risk. Duration is always less than the maturity of a bond The duration of a bond is related to the maturity of the bond, but the duration is always less than or equal to the maturity of a bond. The duration of a bond is a sort of weighted average of all the future payments offered by the bond. Most bonds make interest payments during the life of the bond and then return their face value when the bond matures. The intervening interest payments are called coupon payments. Coupon payments Back in the good old days, when bonds were issued in paper bearer form and not electronically registered form, bond investors could claim their interest payments by clipping a coupon from the paper bond. This paper coupon was honored by banks like a check. Computers and the IRS' desire to track interest payments put an end to paper coupons on bonds, but the terminology of "coupon payments" persists to this day. High coupons reduce duration Anyway, high coupon payments reduce the duration of a bond. Early repayment of principal, often called a sinking fund, also reduces a bond's duration. So what's the big deal about a bond's duration? A bond's interest rate risk is proportional to its duration. Higher duration bonds face higher interest rate risk. Let's illustrate this with an example. Take two bonds that both mature in 10 years. One makes semi-annual interest payments equal to the current market rate of 10 percent and repays its face value of $1,000 at maturity. The other bond is sold initially at a deep discount to its face value. It makes no interest payments for 10 years, but at the end of 10 years it pays the full face value of $1,000. This is a so-called zero coupon bond and is similar to a US EE savings bond. Because the first bond makes intervening coupon payments, it has a duration of about 6.5 years. The zero coupon bond has a duration of 10 years. Because of its longer duration, the zero coupon bond is almost twice as sensitive to changes in interest rates as the first bond, although they both have the same maturity date. It's easy to see why the coupon bond has lower interest rate risk. Say interest rates suddenly increased. You could take the coupon payments from the first bond and reinvest them at the higher rate, thus cutting your losses. With the zero coupon bond, you're locked into the lower interest rate until the bond matures. Copyright 1997 by David Luhman
Views: 6477 MoneyHop.com
Calculating the Yield of a Zero Coupon Bond using Forward Rates
 
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This video shows how to calculate the yield-to-maturity of a zero-coupon bond using forward rates. A comprehensive example is provided to demonstrate how a formula can be used to compute the yield of a zero-coupon bond when you know the forward rates. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 6504 Edspira
Bond Duration and Interest Rate Risk - What they are and why they are important
 
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http://www.learnbonds.com/bond-duration/ - Bond Duration is a measurement of how long it takes for the price of a bond to be matched by the money it generates. Here is a video overview.
Views: 10194 Learn Bonds
Modified duration of zero-coupond bond (FRM practice question)
 
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A zero-coupon bond with maturity of ten (10) years has a 6% bond-equivalent yield (semi-annual compounding). What is the bond's modified duration?
Views: 21934 Bionic Turtle
8. Value a Bond and Calculate Yield to Maturity (YTM)
 
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Download Preston's 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location: http://www.amazon.com/gp/product/0982967624/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0982967624&linkCode=as2&tag=pypull-20&linkId=EOHYVY7DPUCW3WD4 http://www.amazon.com/gp/product/1939370159/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1939370159&linkCode=as2&tag=pypull-20&linkId=XRE5CA2QJ3I2OWSW In this lesson, we began to understand the important terms that truly value a bond. Since most investors will never hold a bond throughout the entire term, understanding how to value the asset becomes very important. As we get into the second course of this website, a thorough understanding of these terms is needed. So, be sure to learn it now and not jump ahead. We learned that there are two ways to look at the value of a bond, simple interest and compound interest. As an intelligent investor, you'll really want to focus on understanding compound interest. The term that was really important to understand in this lesson was yield to maturity. This term was really important because it accounted for almost every variable we could consider when determining the true value (or intrinsic value) of the bond. Yield to Maturity estimates the total amount of money you will earn over the entire life of the bond, but it actually accounts for all coupons, interest-on-interest, and gains or losses you'll sustain from the difference between the price you pay and the par value.
Views: 335568 Preston Pysh
Excel Finance Class 54: Bonds & Interest Rate Risk
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Learn Interest Rate Risk: 1. The Longer The Maturity, The More YTM Affects Bond Price 2. The Lower The Coupon Rate, The More YTM Affects Bond Price
Views: 11575 ExcelIsFun
Macaulay Duration
 
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This video discusses the concept of Macaulay Duration. The video uses a comprehensive example to demonstrate how Macaulay Duration is calculated, and it explains how Macaulay Duration is used to compare the interest rate risk of different bonds. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 60982 Edspira