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.
It's because the company that issued the bond is paying it off in more installments so the interest accrued becomes less. A good examply would be mortgage payments. If you change your mortgage payments from monthly to bi-weekly, you will pay less interest.
try explaining using the present value of an annuity formula + the present value of a lump sum payment to explain so the formula at the end doesnt look so confusing for those who are new to this concept?
please help me!
bonds with face value of 100$ with a term of 10 years, coupon rate=9%, bond has issued 5 years ago. Return ratio required is 11%. What is the current price of the bond?
I'm not sure about the result
alright u didnt explain like anything. the part u slowed down on was the semi annual part where all u did was divide and multiply things by 2. thats not the tricky part. the tricky part is the formula u use, what each thing is, etc. u dont explain this so is this video for people who already know how to do all this just not divide or multiply by two?
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By simply showing the squred values for each year and the final face/par value computation, you've given me a "legend" that is so much easier to comprehend than all of my senior college level financial textbooks. I was able to accurately do some calcualtions after watching this video only once. Thank you!
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