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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: 90915 Subjectmoney
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: 62759 tutor2u
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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Premium Course: https://www.teachexcel.com/premium-courses/68/idiot-proof-forms-in-excel?src=youtube 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: 189260 TeachExcel
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: 53444 MithrilMoney
Bond Valuation part 1
 
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Views: 140002 Rahul Malkan
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: 574271 Khan Academy
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: 390922 Preston Pysh
CAIIB - BFM-  How to calculate Value of Bond - with Practical Example - ?
 
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In this video calculation of value of bond by using different methods has been explained
Views: 39031 Ns Toor
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: 143528 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: 36263 EconplusDal
Calculating the Price of a Bond (Basic - Formula Method)
 
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Calculate the price of a bond using the PV of $1 formula. Keep in mind that there are SEVERAL ways to calculate the PV of a bond: Excel, financial calculators, time value of money tables. Pay close attention to the method(s) that your instructor expects you to master.
Views: 224 TLC Tutoring
Bond Price and Bond Yields - Simplified | Money and Banking Part 3.1 | Indian Economy
 
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How to Prepare Indian Economy for UPSC CSE Prelims 2019 ? Video Link : https://youtu.be/SYuTBEMmzJ4 To Join Economy Prelims Telegram Channel - https://t.me/NEOIASECONOMYPRELIMS To Join Economy Mains Channel https://t.me/NEOIASECONOMYMAINS Economy Previous Year Questions Link : https://drive.google.com/open?id=1zmjyKUMAttVddsQ6wInX1zGBKfy-jU0q Learn complete concept of Indian Economy for CIVIL SERVICE EXAMINATION in the simplest way. NEO IAS e-learning classes is an online program which aims to create CIVIL SERVANTS for the development of the nation by providing the video series of complete topics that are relevant for the CIVIL SERVICES (IAS/IPS) Exam.
Views: 37716 NEO IAS
Bonds: Spot Rates vs. Yield to Maturity
 
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What's the difference between a spot rate and a bond's yield-to-maturity? In this video you'll learn how to find the price of the bond using spot rates, as well as how to find the yield-to-maturity of a bond once we know it's price. Simply put, spot rates are used to discount cash flows happening at a particular point in time, back to time 0. A bond's yield-to-maturity is the overall return that the investor will make by purchasing the bond - think of it as a weighted average!
Views: 10417 Arnold Tutoring
Bonds - Par Value and more
 
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Bonds - Par Value and more
Views: 18045 Engineer Clearly
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: 95586 MBAbullshitDotCom
Bond Prices and Interest Rates
 
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How a bond works, how bond prices change inversely with interest rates, and how open market operations by the FED influence interest rates and the economy.
Views: 44977 Wyvern66 Economics
Treasury bond prices and yields | Stocks and bonds | Finance & Capital Markets | Khan Academy
 
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Why yields go down when prices go up. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/annual-interest-varying-with-debt-maturity?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/relationship-between-bond-prices-and-interest-rates?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: 257832 Khan Academy
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: 82249 Edspira
Khan Academy - Bond Prices and Interest Rates
 
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Khan Academy on Bond Prices and Interest Rates
Views: 152609 Jonathan Horn
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: 29886 mattfisher64
Theoretical price of a bond using spot rates (FRM T3-9)
 
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[my xls is here https://trtl.bz/2GyTeex] The theoretical bond price is the present value if the future cash flows are discounted at the spot (aka, zero rates); in other words, it is the price given by discounted cash flow (DCF). We don't expect the traded (observed) price to exactly match because the DCF price is fundamental, yet technical factors influence price too (e.g., supply/demand, liquidity). Discuss this video here in our FRM forum: https://trtl.bz/2JJIxKG.
Views: 1420 Bionic Turtle
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: 26833 Religare
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: 24968 Elizabeth Schmitt
Bonds: Spot Rates from Forward Rates
 
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Learn the difference between a forward rate and a spot rate, and how to determine spot rates from forward rates by setting up equivalent expressions. Then you can use those spot rates to calculate the price of a coupon-paying bond.
Views: 12783 Arnold Tutoring
Clean Price Calculation of Corporate Bond - FRM Part 1 Exam Problem
 
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Knowledge Varsity (www.KnowledgeVarsity.com) is sharing this video with the audience. Even though this is a simple problem, candidates need to be careful as the computed value from the calculator is not the correct answer. You need to compound and discount to get the correct answer. There are 2 approaches given here, you can choose any one of them.
Views: 9144 KnowledgeVarsity
CFA Level I- 2015 -Fixed Income : Calculation of bond price using spot,YTM, Forward Rate
 
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FinTree website link: http://www.fintreeindia.com FB Page link :http://www.facebook.com/Fin... We love what we do, and we make awesome video lectures for CFA and FRM exams. Our Video Lectures are comprehensive, easy to understand and most importantly, fun to study with! This Video lecture was recorded by our popular trainer for CFA, Mr. Utkarsh Jain, during one of his live CFA Level I Classes in Pune (India).
Actuarial Exam 2/FM Prep: Callable Bonds (Price and Minimum Yields)
 
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Financial Math for Actuarial Exam 2 (FM), Video #117. Exercise 4.3.1 from "Mathematics of Investment and Credit", 6th Edition, by Samuel A. Broverman.
Views: 1297 Bill Kinney
Finding YTM
 
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A brief demonstration on finding the Yield to Maturity of a bond
How To Get Prize Bond Lucky Number?
 
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پرائز بانڈ کے حلال یا حرام ہونے کا فتویٰ اور علمائے کرام کی رائے اس لنک پہ کلک کر کے جانیں: لنک: http://bit.ly/2I1YXNQ
Views: 614368 Android Ki Dunya
Bonds: effective of maturity on bond price
 
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A tricky learning objective in the FRM is "Discuss the effect maturity has on the price of a bond." Answer: Bond price increases with maturity whenever the coupon rate exceeds the forward rate over the period of maturity extension. Price decreases as maturity increases whenever the coupon rate is less than the relevant forward rate.
Views: 8252 Bionic Turtle
Confirm Bond Price Calculation
 
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Bond Price Confirmation
Views: 439 Dr. Phil Harris
Bonds - Yield to Maturity - Example 1
 
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In this video, you will learn to find out yield to maturity for a bond.
Views: 15765 maxus knowledge
Bonds - Yield to call - Example 1
 
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In this video, you will go through an example to find out the yield to call of a bond.
Views: 6954 maxus knowledge
Bonds - Semiannual interest payments - Example 1
 
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In this video, you will learn how to find the value of bonds when interest is paid annually, semiannually and quarterly.
Views: 6399 maxus knowledge
Understanding Convertible Bonds
 
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Understanding Convertible Bonds
Views: 34369 InvestingForMe
How to Start Pakistani Prize Bonds Sell & Buy Business
 
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How to Start Pakistani Prize Bonds Sell & Buy Business good idea for people who wants earn money fast way national saving bank announced draw every month 2 times. Gaze Meow Is Educational and News Channel about Anything Technology, Weird , And short documentary.
Views: 530286 Gaze Meow
Bond DV01 and duration
 
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The DV01 gives us the dollar change in bond price for a one basis point decline in the rate. We typically assume yield (YTM) is the rate change, so as Tuckman explains this is technically a yield-based DV01; i.e., we could instead shock spot or forward rates instead.
Views: 43713 Bionic Turtle
Amortizing a Bond Premium
 
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This video explains how to account for bonds issued at a premium. An example is provided to illustrate how to calculate the bond proceeds, premium, interest expense, amortization of the bond premium, and the carrying value of the 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: 73701 Edspira
What is Dirty Price of a Bond?
 
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This video explains the concept of Clean price and Dirty price of a bond
Views: 4101 Ns Toor
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: 380865 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: 21259 Elinda Kiss
FRM: Treasury bond futures: conversion factor
 
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The short position in a US Treasury bond futures contract can select among many different eligible (maturity greater than 15 years) bonds for delivery. This is by design; the Fed and Treasury do NOT want to see a "run on the issue" if only one bond can be delivered. The conversion factor puts the eligible bonds on a level playing field, making the short almost (but not quite) indifferent to which bond is delivered. For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 41559 Bionic Turtle
Book Value vs Market Value vs Face Value of Bonds: How to Keep Them Straight
 
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You’ll learn about the book value vs market value vs face value of bonds in this tutorial, and you’ll understand how to calculate and project them in financial models. https://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Resources: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Book-Value-vs-Face-Value-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Book-Value-vs-Face-Value.xlsx Table of Contents: 3:06 Excel Examples 11:04 Combined Example 14:46 Recap and Summary SHORT ANSWER: Face Value is the amount of Debt that a company issues, pays interest on, and must repay upon maturity. It is affected ONLY by Debt issuances, principal repayments, and Accrued or “Paid-in-Kind” (PIK) Interest. Book Value is the Debt that shows up on a company’s Balance Sheet under Liabilities & Equity, but it is NOT necessarily the amount it pays Interest on or what it must eventually repay. It’s affected by everything above (issuances, repayments, and accrued interest), plus Issuance Fees, any Discount or Premium when the bond is first issued, and the amortization of both those items. Market Value is what someone else would pay to buy the company’s Debt on the secondary market if it trades like that. It’s affected by interest payments, market interest rates on similar Debt, and future repayment upon maturity. In practice, the bond’s coupon rate vs market rates, as well as the credit default risk of the issuer, make the biggest impact. EXCEL EXAMPLES: Toro is spending a lot and must issue additional Debt to fund operations in several years. The Face Value of Debt goes up when new Debt is issued and down when there’s a repayment or maturity. The Book Value of Debt also changes based on these, but we also must deduct the 2% financing fee on new issuances and add the amortization of these financing fees over 10 years. We don’t know enough to determine the Market Value since it depends on current market rates vs the 6.1% coupon rate the company is currently paying. In another example, Atlassian has issued a Convertible Bond that matures in 5 years, if it’s not converted into Equity before then. Convertible Bonds are often separated into Equity and Debt components to reflect their dual nature, and the Book Value here equals the Face Value minus the Unamortized Issuance Fees minus the Debt Discount, which represents the difference in value between a traditional, non-convertible bond with a higher interest rate and the much-lower-rate convertible bond. The Face Value here never changes until the end because there are no additional issuances, there’s no accrued interest, and there’s only the single maturity at the very end. Cash Interest never changes since it’s always based on this constant Face Value and a constant interest rate. The Book Value keeps increasing as the Debt Discount is amortized over time and as the Issuance Fees are also amortized, but it finally reaches $0 at the same time as the Face Value. We don’t know enough to determine the Market Value, as we’d need to know the prevailing market interest rates on similar bonds and Atlassian’s default risk. ONE EXAMPLE TO RULE THEM ALL: Assume that a company issues a $1,000 10-year bond at a 5.00% coupon rate vs prevailing market rates of 6.35% on similar bonds. There are no principal repayments, and the interest is 100% Cash. There is a 2% issuance fee. Due to the below-market rate, the bond is issued at a $100 Discount. The Face Value is $1,000 initially, and it never changes until maturity. The Cash Interest is 5% * $1,000 = $50 per year until maturity. The initial Book Value is the $1,000 Face Value – $100 Discount – $20 Issuance Fee = $880. The Book Value will change according to the amortization of the Discount and the amortization of the Issuance Fees each year. Book Value, Year 1: $880 + $100 / 10 + $20 / 10 = $892 Book Value, Year 2: $892 + $100 / 10 + $20 / 10 = $904 The Market Value is initially the $1,000 Face Value minus the $100 Discount (verify with the PRICE function in Excel), so $900. We don’t know exactly how it will change over time because we don’t know future interest rates, but if rates go up, the Market Value will go down, and if credit default risk goes up, the Market Value will also go down (and vice versa for both of these). Does Book Value vs Market Value vs Face Value for Bonds Matter? In most cases, these distinctions don’t make a huge difference. If you’re under time pressure, you can simplify all this and include only Issuances and Repayments to project Debt. But interview questions on these topics could still come up, and if a company has a Convertible Bond or a normal bond issued at a big discount or premium, the Book Value vs Face Value distinction matters since interest is based on Face Value.
Bonds - Current yield - Fundas
 
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In this video, you will learn to find out current yield for a bond.
Views: 5493 maxus knowledge
CAPM Capital Asset Pricing Model in 4 Easy Steps - What is Capital Asset Pricing Model Explained
 
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OMG wow! I'm SHOCKED how easy clicked here http://www.MBAbullshit.com for CAPM or Capital Asset Pricing Model. This is a model applied to indicate an investor's "expected return", or how much percentage profit a company investor ought to logically demand to be a "fair" return for making investments into a company. http://mbabullshit.com/blog/2011/08/06/capm-capital-asset-pricing-model/ To find this, yet another question can be queried: Just how much is the sound "decent" percentage % profit that a financier should probably receive if he invests in a business (having comparatively high risk) in contrast to putting his money in government bonds which might be regarded to be "risk free" and instead of putting his hard earned cash in the general share market presumed to offer "medium" risk? Visibly, it is almost only "fair" that in fact the investor receives a gain higher compared to the government bond percentage (due to the reason that the solitary enterprise possesses higher risk). It's moreover only just that he should expect a return larger than the broad stock exchange yield, because the specific business enterprise has higher risk compared to the "medium risk" general stock market. So just as before,how much exactly should this investor fairly receive as a smallest expected return? This is where the CAPM Model or Capital Asset Pricing Model comes in. The CAPM Formula includes all these variables simultaneously: riskiness of the individual firm depicted by its "beta", riskiness of the universal stock market, rate of interest a "risk free" government bond would give, as well as others... and then spits out an actual percent which your investor "should be allowed" to take for investing his or her hard earned money into this "riskier" single firm. This particularly exact percent is known as the "expected return", given that it can be the yield that he should "expect" or require to obtain if he invests his hard earned cash into a specific firm. This precise percentage is known as the "cost of equity". The CAPM Model or CAPM Formula looks something like this: Expected Return = Govt. Bond Rate + (Risk represented by "Beta")(General Stock Market Return --Govt. Bond Rate) Utilizing this formula, you are able to see the theoretically exact rate of return theindividual business enterprise investor ought to reasonably expect for his or her investment, if the CAPM Model or Capital Asset Pricing Model is to be held. http://www.youtube.com/watch?v=LWsEJYPSw0k What is CAPM? What is the Capital Asset Pricing Model?
Views: 520220 MBAbullshitDotCom