Mod13 a cv3
Upcoming SlideShare
Loading in...5
×
 

Mod13 a cv3

on

  • 593 views

 

Statistics

Views

Total Views
593
Views on SlideShare
593
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via

Usage Rights

CC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike License

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Mod13 a cv3 Mod13 a cv3 Document Transcript

  • Module 13AC BOND VALUE CALCULATION OBJECTIVE: This is a simple valuation model for bonds with a stated (coupon) interest rate and a maturity date. Given all the relevant data, the market price of the bond is calculated. If the market interest rate is higher than the stated rate, the price of the bond will be below its maturity price, and vice versa. INPUTS (will appear in blue): 1) The bond's maturity price (usually $1,000) in cell F35. 2) The stated (coupon) annual interest rate in cell F37. This is the interest rate at which the bond was issued, and is based on the bond's maturity price. 3) Number of interest payments per year in cell F39. If the bond pays semi-annually (as is usual), enter 2. 4) The market interest rate in cell F41. This is the rate which now prevails in the market for bonds of similar quality and maturity. It is the yield to maturity. 5) Number of years to maturity in cell F43. TO OBTAIN YIELD TO MATURITY: This program is also designed to calculate the yield to maturity. In this case, the present price of the bond is known. Enter data in cells F35, F37, F39 and F43. Then, by trial and error, enter different numbers for the market interest rate in cell F41 until the actual present price is shown in cell G48. BOND PRICE CALCULATION Sample data have been entered as an example. Maturity value 1000 Stated (coupon) interest rate (in decimals) 10.0% Number of interest payments per year 2 Market interest rate -- yield (in decimals) 8.0% Years to maturity 20 Price of bond 989.64 + 208.29 = 1197.93