:-) I got a thumb-drive with this virtual calculator from Texas Instruments website. As an instructor, I uploaded my class's syllabus on their website in which they see that I require the students to get the Texas Instruments financial calculator for my class. And for "advertising" their product to my students, they send me a real calculator and this thumb drive (for my lectures). Both are for free. It's very nice of them! I use this virtual calculator in my in-class lectures all the time. Students love it too. The only problem is, you can't copy the file from it. You seem to need to use the thumb-drive.
Good question! I think the reason the PV of the semiannual coupon bond is LOWER because of more heavy discounting. The interest is added every half a year, rather than every year, which creates the effect of interest-on-interest within each year. This creates more heavy discounting.
Yield to maturity is the same thing as the discount rate. It's "R" in the formula, and "I/Y" in the financial calculator. Coupon rate basically helps you find the recurring cash flow amount. Coupon rate X $1,000 face value = coupon payment each year.
Bond Value with annual coupons: PV = PMT x (1/R) x (1 - 1/(1 + R)^N) + FV/(1 + R)^N Bond Value with semi-annual coupons: PV = (PMT/2) x (1/(R/2)) x (1 - 1/(1 + (R/2))^(Nx2)) + FV/(1 + (R/2))^(Nx2) Here, "PMT" = annual coupon amount, which is calculated by taking the "coupon rate", and multiplying by the Face Value (which usually equals $1,000) "R" = annual interest rate on the bond, usually called Yield To Maturity "N" = how many years are left until the bond matures "FV" = Face Value for the bond which usually equals $1,000
I think these should be your calculator keys: FV=-1000 (given), PMT=-50 (given), N=5 years X 2 =10, I/Y=8 per year /2 = 4 semiannual yield, CPT PV. The wording is just a bit different. It doesn't give a coupon rate, but it gives the coupon payment directly, $50. And Yield must be the "yield to maturity".
Bond Value with annual coupons: PV = PMT x (1/R) x (1 - 1/(1 + R)^N) + FV/(1 + R)^N Bond Value with semi-annual coupons: PV = (PMT/2) x (1/(R/2)) x (1 - 1/(1 + (R/2))^(Nx2)) + FV/(1 + (R/2))^(Nx2) Here, "PMT" = annual coupon amount, which is calculated by taking the "coupon rate", and multiplying by the Face Value (which usually equals $1,000) "R" = annual interest rate on the bond, usually called Yield To Maturity "N" = how many years are left until the bond matures "FV" = Face Value for the bond which usually equals $1,000
It's the so-called Present Value of an Ordinary Annuity formula (for coupon payments) plus the Present Value of a Single Cash Flow formula (for the face value). Here's for example how you put them together into one formula: www.wallstreetmojo.com/bond-pricing-formula/
Hi! I'm having trouble im answering the coupon rate. I'm really confuse because payment is not given. I have only the face value, ytm, current price, maturity rate and a coupon payment which is semi annully. It would he a big help if you respond asap
Hi, so you are saying you need to find the coupon rate? Coupon rate = coupon payment / face value. It sounds like you are given the coupon payment and the face value.
Thank you so much for posting this video for others. You literally saved my life!
This is the best explanation of this that I've heard! Thank you!
So simply and very well explained. Thank you so much. Now I need to get myself a calculator like yours ☺
:-)
I got a thumb-drive with this virtual calculator from Texas Instruments website. As an instructor, I uploaded my class's syllabus on their website in which they see that I require the students to get the Texas Instruments financial calculator for my class. And for "advertising" their product to my students, they send me a real calculator and this thumb drive (for my lectures). Both are for free. It's very nice of them! I use this virtual calculator in my in-class lectures all the time. Students love it too.
The only problem is, you can't copy the file from it. You seem to need to use the thumb-drive.
I just discovered your videos! They are so helpful, thank you so much!
Thank you so much, my professor could not explain this lesson as you did. I felt so helpless with my lessons before finding this video thankyou
You're welcome! :-)
Well explained lecture madam, thank you
Very helpful content. Thank you
Brilliant lecture
Thank you, you're a great helper. Keep it up a good work!!
Thank you so much, I finally got to know how to work a financial calculator
I have a TI-84 Plus Texas Instruments one but is no FV button
Miss you professor.
How can we calculate this in simple calculator, because this one is not allowed in exam
Can you explain it without using calculator bcuz it don't have this scientific calculator
Same probl here.
Same question I have 😩 my exam is in a few hours
get a financial calculator cuz they're only $10 now.
thank you. You explained this very good
Thank you 🙏 so much for this!
Thank you!
Simple for that pv= coupen interest((1-1/(1+r)n/r))+ fv/(1+r)n here r means rate of interest fv face value
Appreciate this lesson. Thank you.
Hello! In theory, shouldn't the semi annual bond have a higher pv due to more frequent payments?
Good question!
I think the reason the PV of the semiannual coupon bond is LOWER because of more heavy discounting. The interest is added every half a year, rather than every year, which creates the effect of interest-on-interest within each year. This creates more heavy discounting.
thanks but your calculator is different from mine
Thank u so much miss. So helpful🙏
Thank you!
Can you explain please what is the difference between yield to maturity 11% and coupon rate 8% ?
Yield to maturity is the same thing as the discount rate. It's "R" in the formula, and "I/Y" in the financial calculator.
Coupon rate basically helps you find the recurring cash flow amount. Coupon rate X $1,000 face value = coupon payment each year.
Thanks ❤️
How do you do this without a present value calculator??¿
Bond Value with annual coupons:
PV = PMT x (1/R) x (1 - 1/(1 + R)^N) + FV/(1 + R)^N
Bond Value with semi-annual coupons:
PV = (PMT/2) x (1/(R/2)) x (1 - 1/(1 + (R/2))^(Nx2)) + FV/(1 + (R/2))^(Nx2)
Here,
"PMT" = annual coupon amount, which is calculated by taking the "coupon rate", and multiplying by the Face Value (which usually equals $1,000)
"R" = annual interest rate on the bond, usually called Yield To Maturity
"N" = how many years are left until the bond matures
"FV" = Face Value for the bond which usually equals $1,000
what amount should an investor be willing to pay for a $1000 , 5year US government bond which pays $50 interest semi annually and is sold to yield 8%?
I think these should be your calculator keys: FV=-1000 (given), PMT=-50 (given), N=5 years X 2 =10, I/Y=8 per year /2 = 4 semiannual yield, CPT PV. The wording is just a bit different. It doesn't give a coupon rate, but it gives the coupon payment directly, $50. And Yield must be the "yield to maturity".
Is it a discount bond or coupon bond ?
In this example it's a "coupon bond" (i.e., it does pay coupons). "Discount bond" is when its price (i.e., PV) is less than $1,000.
Am failing to use the calculator. What formula can I used so that I follow step by step
Bond Value with annual coupons:
PV = PMT x (1/R) x (1 - 1/(1 + R)^N) + FV/(1 + R)^N
Bond Value with semi-annual coupons:
PV = (PMT/2) x (1/(R/2)) x (1 - 1/(1 + (R/2))^(Nx2)) + FV/(1 + (R/2))^(Nx2)
Here,
"PMT" = annual coupon amount, which is calculated by taking the "coupon rate", and multiplying by the Face Value (which usually equals $1,000)
"R" = annual interest rate on the bond, usually called Yield To Maturity
"N" = how many years are left until the bond matures
"FV" = Face Value for the bond which usually equals $1,000
helps a lot mam
Life saver🙃
Why not use the bond functions. That is what they are made for and not as confusing.
It would be great help if u solve this problem for me
don't have this kind of calculator. please how do i calculate it
It's the so-called Present Value of an Ordinary Annuity formula (for coupon payments) plus the Present Value of a Single Cash Flow formula (for the face value). Here's for example how you put them together into one formula: www.wallstreetmojo.com/bond-pricing-formula/
Thank you
how do you find the face value first? I'm lost...my coupon is 7.5%, 2.369% for yield to maturity, 11yr maturity
Usually the face value is given. If not, the default is usually $1,000.
@@teachmefinance9453 thank you!
Hi! I'm having trouble im answering the coupon rate. I'm really confuse because payment is not given. I have only the face value, ytm, current price, maturity rate and a coupon payment which is semi annully. It would he a big help if you respond asap
Hi, so you are saying you need to find the coupon rate? Coupon rate = coupon payment / face value. It sounds like you are given the coupon payment and the face value.
Equation please
I explain the Bond Value formula in my other video: th-cam.com/video/gy03aQDKNTo/w-d-xo.html