Search results “Bond coupon rate and yield”

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
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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.

Views: 14031
Buckingham Strategic Wealth

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: 102941
Investopedia

The coupon rate represents the actual amount of interest earned by the bondholder annually while the yield to maturity is the estimated total rate of return of a bond, assuming that it is held until maturity.
Click here to learn more about this topic: https://corporatefinanceinstitute.com/resources/knowledge/finance/coupon-rate/

Views: 3921
Corporate Finance Institute

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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.

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InformedTrades

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ASWINI BAJAJ

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.
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Views: 583067
Khan Academy

Investing in bonds can be tricky in today's market. Understanding the fundamental concepts associated with bonds is a good place to start.

Views: 27304
Religare

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.
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Views: 83359
Edspira

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
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I Hate Math Group, Inc

This video explains how to calculate the coupon rate of a bond when you are given all of the other terms (price, maturity, par value, and YTM) with the bond pricing formula.

Views: 4222
Michael Padhi

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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.

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Preston Pysh

USM Finance man, Smoluk Investment Management, Basic Financial Management

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Bert Smoluk

Financial Math for Actuarial Exam 2 (FM), Video #92. Exercise #4.1.5 from "Mathematics of Investment and Credit", 6th Edition, by Samuel A. Broverman

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Bill Kinney

A simple comparison using a 2.5 year $100 par 6% semiannual coupon bond. Spot rate: the yield for each cash flow that treats the cash flow as a zero-coupon bond. A coupon-paying bond is a set of zero-coupon bonds. Forward rate: the implied forward rates that make an investor indifferent to rolling over versus investing at spot.
Yield to maturity (YTM, an IRR): the single rate that can be used to discount all of the bond's cash flows, in order to price the bond correctly. So the YTM is a flat horizontal line. For more financial risk videos, visit our website! http://www.bionicturtle.com

Views: 50287
Bionic Turtle

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.
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Views: 42096
Edspira

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: 1547
GeekDonkey

This video makes a clear distinction between two commonly conflated fixed income market concepts: yield to maturity and rate of return. Though often described as a measure of future returns and regularly used as a proxy for such, as ways of conceiving of yield to maturity those interpretations are respectively inaccurate and potentially problematic. The presentation illustrates the method for computing the two measures and identifies why they will likely never be the same for long-term coupon securities.
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Insider's Guide to Finance

This video is a supplement to an investments course I teach. In this video I walk through the following problem:
Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 3 percent coupon with semiannual coupons. The term structure of interest rates (via STRIPS) are provided in the table below. What is the price of the bond today? What is its YTM? What is the price of the bond in six months? What was your holding period return?
Years | APR
0.5 | 2%
1.0 | 6%
1.5 | 8%
2.0 | 10%
A pdf of the solution is available here: https://drive.google.com/file/d/0B3xxLxQB8cTzUTZqUXg3bFFIcE0/view?usp=sharing
A pdf of the solution to a similar problem is available here: https://drive.google.com/file/d/0B3xxLxQB8cTzUXBQdVpWS0NxdU0/view?usp=sharing
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Bonds and Bond Yields. A video covering Bonds and Bond Yields
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EconplusDal

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: 11195
Arnold Tutoring

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: 145374
Bionic Turtle

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. ... In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.
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Yadnya Investment Academy

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.

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Elizabeth Schmitt

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: 55967
Investopedia

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.
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Subjectmoney

Coupon Rates and Yield to Maturity are not the same thing. Find out more here.
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Investor's Business Daily

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.
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Ambition Learning Solutions

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.
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Khan Academy

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NEO IAS

There are several different types of yield you can use to compare potential returns on an investment. Chip Loughridge with Zions Direct explains Current Yield and Yield to Maturity, as well as when you would typically use these calculations.
What did you think? Leave a comment or subscribe to our channel to continue building your investment knowledge.
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Views: 17067
Zions TV

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
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Views: 260207
Khan Academy

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.
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Investment for Life

Here I solve a yield to maturity on a bond that pays semi-annual interest payments.

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1sportingclays

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Yield to Maturity
This is a rate of return which is generated by a bond over a period up to its maturity. If the future cash flows of interest and redemption price are discounted using YTM, the present value of such cash flows will be equal to its actual market price. In other words, a rate of discounting which can make the intrinsic value equal to the actual market price can be considered as YTM Rate.
For example, if a bond is issued at par with face value of ` 1,000 and redeemable at par with coupon rate of 10% per annum is actually providing the yield of 10% per annum. In other words, the YTM of such bond shall be 10% per annum.
However, in the same example if the bond is redeemable at premium, other things remaining same, it would obviously provide an yield higher than 10%.
Annuity Bonds
These bonds are paid over a period of time by the same amount of cash flows each year. Therefore, there is neither any coupon payment nor any redemption price. All the cash flows of these bonds are spread over their life by way of annuities.
These are bonds which would repay the principal over its life along with interest by way of constant cash flows. For example, a bond that is issued at ` 1,000 with 5 years life provides an annuity of ` 260 per annum at end of each year over its life of 5 years.
The total cash flows over 5 years will be (` 260 x 5) = ` 1,300
This includes the principal repayment of ` 1,000 and the total interest of ` 300.
Changes in Intrinsic Value of Bond as it approaches its Maturity
(Inter-relationship between Intrinsic value and Redeemable Value)
The intrinsic value of the bond gets closer to the redemption price as and when the bond approaches its maturity. If a Premium Bond is redeemable at par, its intrinsic value constantly declines over time. If a Discount Bond is redeemable at par, its intrinsic value constantly rises over time.
Zero Coupon Bonds (ZCB)
These are bonds which do not provide any coupon payments. In other words, there is no interest payable on such bonds. These bonds are either issued at nominal discount or at par and redeemable at a significant premium. The present value of cash flows from this bond considers only the present value of redemption price which is its intrinsic value. With maturity date coming closer the intrinsic value of such bonds increases.
Deep Discount Bonds (DDB)
These are such zero coupon bonds, which are redeemable at par but issued at significant discount.
Callable Bonds
A callable bond is such a bond that provides an option to the issuer to call for redemption at an earlier date as compared to maturity. Such bonds are generally redeemed before maturity if the interest rate in the market declines. Inversely if the interest rate increases the issuer will opt for redemption of the bonds at the specified maturity date only. The call date is a specified date at which the issuer can call for premature redemption. The call price of a bond generally is higher than the redemption price payable on maturity, in order to compensate the investor.
Yield to Call (YTC)
YTC is applicable only for callable bonds. YTC is determined just like YTM. The only difference is, while determining YTC the applicable date of redemption will be the call date and not maturity date and the redemption value applicable at the call date shall be considered in place of redemption at maturity.
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Views: 9099
CA Nikhil Jobanputra

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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:
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Views: 191082
TeachExcel

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:
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This MithrilMoney lecture was delivered by Andy Duncan, CQF.
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Views: 54651
MithrilMoney

May 28 -- Franklin Templeton Fixed Income Group Senior Vice President Eric Takaha discusses the bond markets. He speaks on “Market Makers.”
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Bloomberg

The yield (aka, yield to maturity, YTM) is the single rate that correctly prices the bond; it impounds the spot rate curve. For each coupon bond, there is a different implied yield. The PAR YIELD is the yield (YTM) for a bond that happens to price at par, and therefore is equal to this bond's coupon. So, the par yield (as a special case or particular YTM) is the coupon rate on a bond priced at par.

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Bionic Turtle

Clicked here http://www.MBAbullshit.com/ and OMG wow! I'm SHOCKED how easy! No wonder others goin crazy sharing this???
How much is it safe to be willing to pay money for a bond?A bond's value is dictated by long run cash flows you might secure by possessing the bond. Where do the future cash flows originate?
They arrive from 1) the coupon payments which represent cash earnings for the holder of the bond, and also 2) the remuneration of principal ("face value" of a typical bond).
Employing the Bond Valuation Formula and assuming a 5% level of interest from a bank, a bond which has a $1,000 face value and 4% coupon rate that would give you $4 per annum for 7 years plus allow you to recoup the $1,000 face value after 7 years would actually maintain a fair value of $941... that is certainly unmistakably small compared to the $1,000 face value.
And so whether or not the face value is $1,000, you ought to be prepared to pay a maximum of only $941 for the bond.(The formula is a little intricate and considers lots of factors, just like yield or yield to maturity, enduring time until maturity, in conjunction with other variables. You ordinarily are not obliged to perform calculations by yourself if you happen to be not in business school. There are loads of no cost calculators online.)
What exactly does the $941 earlier mentioned show? If you pay more than $941 for this bond, you would be more advantaged depositing your dollars within a bank instead. Put another way, in case you compensate above $941, your personal rate of return for possessing this bond will certainly be less when compared to the bank interest rate of 5%. Thus... it would be far better to deposit in the bank.So when a bond is purchased or sold, is it procured or sold at the face value or at the fair value?
Routinely, if it is the initial time a bond is being issued and sold by the issuing company within the primary bond market, it's done at the face value. Having said that, in the secondary market, whenever the bond is obtained or sold by private people, it happens to be swapped at market value, which is often vary from both the face value and fair value.
The market value is in basic terms what true persons are happy to pay out or give for the bond, whether or not this is considerably less or greater compared to the face value and/or fair value. Typically though, the market value is closer to the fair value than to the face value. Take into account nonetheless, that in the secondary market, an enormous aspect which influences bond price is risk as represented by its credit rating, and this factor is not included in the formula applied to assess how to value a bond that was revealed above. http://www.youtube.com/watch?v=qgFa-3Iz9mc http://mbabullshit.com/blog/bond-valuation-in-35-minutes/
how to value a bond valuation formula

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MBAbullshitDotCom

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.
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Zions TV

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/

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MBAbullshitDotCom

CHAPTER WISE CLASSES ARE AVAILBLE
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CA PAVAN KARMELE

In this video I introduce the concept of yield curves - plots of yield to maturity for various times to maturity for instruments of a similar quality (and often same issuer)
I show how we can bootstrap a zero curve (spot curve) from a series of coupon paying instruments as long as we have one instrument on the yield curve that has only one cashflow remaining - this begins the bootstrapping process.
I explain how the spot curve can be used to discount the individual cashflows at the correct time/discount factor to arrive at a more accurate fair price for the bond, and then the YTM can be calculated from that price.

Views: 12837
Matt Thomas

THIS IS THE VIDEO IN ECONOMIC DICTIONARY WHICH SHORTLY COVERS TOPICS LIKE BOND, BOND YIELD, INTEREST RATES, INFLATION, DEFLATION AND QUANTITATIVE EASING IN HINDI.
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Ideal Coaching

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

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MBAbullshitDotCom

In this video, I discuss how to calculate YTM using the trial & error method. I then follow it up with how to calculate YTM using the Goal Seek function in Excel (which essentially does the trial & error in the backdrop).

Views: 5990
S Roy

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.
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Edspira

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