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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: 508073 Khan Academy
Why Bond Prices and Yields are Inversely Related
 
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Help us make better videos: http://www.informedtrades.com/donate Trade stocks and bonds with Scottrade, the broker Simit uses: http://bit.ly/scottrade-IT (see our review: http://bit.ly/scottrade-IT2) 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.
Views: 60102 InformedTrades
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: 40261 tutor2u
The Differences Between Coupon, Yield and Expected Return
 
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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.
Investopedia Video: Bond Yields - Current Yield and YTM
 
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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: 89899 Investopedia
Bonds | Confused between the rates: Spot, Forward, Coupon, Current Yield, IRR, YTM, BEY
 
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CFA | FRM | SFM | Excel Live Classes | Videos Available Globally For Details: www.aswinibajaj.com WhatsApp: +91 9831149876 or https://api.whatsapp.com/send?phone=919830497377&text=Want%20to%20know%20more%20about%20classes & we shall get back to you. E-mail: [email protected] Hope you had a great learning experience! Do Like and Subscribe! And check our other videos on Finance (CFA, FRM, SFM), Resume making, Career options, etc. Click to access playlist. https://www.youtube.com/channel/UCyt8... Thank you.
Views: 11110 ASWINI BAJAJ
Calculating the Yield of a Zero Coupon Bond
 
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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. 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: 33580 Edspira
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: 81720 Subjectmoney
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.
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: 72706 Edspira
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: 22947 Religare
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: 25089 EconplusDal
Calculate the Coupon Rate of a Bond
 
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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: 295 Michael Padhi
Coupon Rate and Yield to Maturity
 
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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/
What is a Coupon
 
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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. for more info: ttps://www.facebook.com/groups/478665558952936/
Views: 11511 Investment for Life
How to calculate the bond price and yield to maturity
 
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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 There are more videos for EXCEL as well Like and subscribe :) Please visit us at http://www.i-hate-math.com Thanks for learning
Views: 284755 I Hate Math Group, Inc
Khan Academy - Bond Prices and Interest Rates
 
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Khan Academy on Bond Prices and Interest Rates
Views: 149831 Jonathan Horn
Bond Price | Bond Yield | Interest Rate | Inflation | Oil Prices | FDI/FPI | Banks SLR | M K Yadav
 
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To download the Handouts, Please Join https://t.me/currentaffairsmkyadav The video Explains the relationship between Bond Price, Bond Yield, Interest Rate, SLR, Inflation, Oil Prices, FDI/FPI
Views: 2578 MK Yadav - theIAShub
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: 351931 Preston Pysh
Relationship between Bond Price & Interest Rate
 
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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. Please leave us a comment/suggestion on our video and do hit "LIKE" if you like the video. SUBSCRIBE TO OUR CHANNEL FOR FULL ACCESS TO ALL OUR VIDEOS ABOUT US: Ambition Learning Solutions is a preemptive training institute providing trainings to undergraduates, post graduates and working professionals on various international certification programs like Certified Financial Planner (CFP), Certified Credit Research Analyst (CCRA), Basics of Financial Markets, Macro Economic Indicators impacting the Financial Markets, Derivatives Market, Technical Analysis, Credit Research, Commercial Banking, Investment Banking, Financial Modeling, Advance Excel, Equity Research, Diploma in Banking and Finance (DBF), NSE's Certified Capital Market Professional (NCCMP) etc. We assist corporate by providing qualified human resources for their operation and expansion requirement. We train their existing staff to furnish them with the latest updates and techniques in their respective domains. Reach us at: Website: www.ambitionlearning.com Facebook: https://www.facebook.com/groups/ambitionlearning/ Email: [email protected] Linkedin: http://www.linkedin.com/profile/view?id=67196015&trk=wvmp-profile
Zero Coupon Bonds
 
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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. Questions or Comments? Have a question or topic you’d like to learn more about? Let us know: Twitter: @ZionsDirectTV Facebook: www.facebook.com/zionsdirect Or leave a comment on one of our videos. Open an Account: Begin investing today by opening a brokerage account or IRA at www.zionsdirect.com Bid in our Auctions: Participate in our fixed-income security auctions with no commissions or mark-ups charged by Zions Direct at www.auctions.zionsdirect.com
Views: 35310 Zions TV
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: 42998 MithrilMoney
Yield to Maturity Versus Rate of Return
 
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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. InsidersGuideToFinance.com facebook.com/insidersguidetofinance
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: 120938 Bionic Turtle
4 Usual Confusions in Bond Valuation: Tutorial for Bond Value in Valuing Bonds (super easy)
 
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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/
Views: 79893 MBAbullshitDotCom
Coupon Bond Price
 
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Calculate the price of a coupon bond.
Views: 13523 John Redden
Bonds | YTM | INTEREST RATES | COUPON | YIELD | HINDI
 
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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: 74 GeekDonkey
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: 238677 Khan Academy
Bonds & Yields - part 3 (Hindi), Inflation vs Interest rates, बॉन्ड्स और यील्ड - 3
 
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This video explains the relationship between inflation and interest rates along with bond prices and rates. This video explains inflation and its effect on interest earned by investors. यह विडियो महंगाई दर और इंटरेस्ट रेट के बीच के सम्बन्ध को समझाता है, की किस प्रकार से महंगाई दर के बढ़ने और घटने का असर इंटरेस्ट रेट आदि पर पड़ता है.
Views: 7952 Rajiv Dharmadhikari
Types of Yield: Current Yield & Yield to Maturity
 
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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. You can open an investment account and purchase stocks, bonds, CDs, mutual funds and more at www.zionsdirect.com or call us at 800-524-8875. Find us elsewhere: Roku – http://www.rokuguide.com/channels/zions-direct-tv Our Newsletter - https://www.zionsdirect.com/newsletter.php Our Blog – http://think.zionsdirect.com Twitter – http://www.twitter.com/ZionsDirectTV Facebook – http://www.facebook.com/ZionsDirect
Views: 13851 Zions TV
Bonds & Bond Valuation | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 1
 
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When a corporation or government wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that are generically called bonds. In this section, we describe the various features of corporate bonds and some of the terminology associated with bonds. We then discuss the cash flows associated with a bond and how bonds can be valued using our discounted cash flow procedure. BOND FEATURES AND PRICES As we mentioned in our previous chapter, a bond is normally an interest-only loan, meaning that the borrower will pay the interest every period, but none of the principal will be repaid until the end of the loan. For example, suppose the Beck Corporation wants to borrow $1,000 for 30 years. The interest rate on similar debt issued by similar corporations is 12 percent. Beck will thus pay .12 × $1,000 = $120 in interest every year for 30 years. At the end of 30 years, Beck will repay the $1,000. As this example suggests, a bond is a fairly simple financing arrangement. There is, however, a rich jargon associated with bonds, so we will use this example to define some of the more important terms. In our example, the $120 regular interest payments that Beck promises to make are called the bond’s coupons. Because the coupon is constant and paid every year, the type of bond we are describing is sometimes called a level coupon bond. The amount that will be repaid at the end of the loan is called the bond’s face value, or par value. As in our example, this par value is usually $1,000 for corporate bonds, and a bond that sells for its par value is called a par value bond. Government bonds frequently have much larger face, or par, values. Finally, the annual coupon divided by the face value is called the coupon rate on the bond; in this case, because $120/1,000 = 12%, the bond has a 12 percent coupon rate. The number of years until the face value is paid is called the bond’s time to maturity. A corporate bond will frequently have a maturity of 30 years when it is originally issued, but this varies. Once the bond has been issued, the number of years to maturity declines as time goes by. BOND VALUES AND YIELDS As time passes, interest rates change in the marketplace. The cash flows from a bond, however, stay the same. As a result, the value of the bond will fluctuate. When interest rates rise, the present value of the bond’s remaining cash flows declines, and the bond is worth less. When interest rates fall, the bond is worth more. To determine the value of a bond at a particular point in time, we need to know the number of periods remaining until maturity, the face value, the coupon, and the market interest rate for bonds with similar features. This interest rate required in the market on a bond is called the bond’s yield to maturity (YTM). This rate is sometimes called the bond’s yield for short. Given all this information, we can calculate the present value of the cash flows as an estimate of the bond’s current market value.
Price of treasury bill and interest rate
 
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In this video clip I explain the relationship between the price of a treasury bill and the interest.
Views: 22733 lostmy1
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: 22625 Elizabeth Schmitt
Calculating the Yield of a Zero Coupon Bond using Forward Rates
 
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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. 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: 7395 Edspira
Coupon Rate Vs. Yield To Maturity
 
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Coupon Rates and Yield to Maturity are not the same thing. Find out more here. Investor’s Business Daily has been helping people invest smarter results by providing exclusive stock lists, investing data, stock market research, education and the latest financial and business news to help investors make more money in the stock market. Learn more. Get more IBD: Like us on Facebook https://business.facebook.com/investorsbusinessdaily Follow us on Twitter https://twitter.com/IBDinvestors Follow us on Instagram https://www.instagram.com/investorsbusinessdaily/ Follow us on StockTwits https://stocktwits.com/InvestorsBusinessDaily
What Happens to My Bonds When Interest Rates Rise?
 
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With interest rate hikes and indications that there will be further increases this year, we've been receiving questions about the impact of rising interest rates on a bond portfolio. In this video, Pure Financial's Director of Research, Brian Perry, CFP®, CFA® answers the question, "what will happen to my bond portfolio when interest rates rise?" If you would like to schedule a free assessment with one of our CFP® professionals, click here: https://purefinancial.com/lp/free-assessment/ Make sure to subscribe to our channel for more helpful tips and stay tuned for the next episode of “Your Money, Your Wealth.” http://bit.ly/2FDSfK2 Channels & show times: http://yourmoneyyourwealth.com https://purefinancial.com IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, Inc. A Registered Investment Advisor. • Pure Financial Advisors Inc. does not offer tax or legal advice. Consult with their tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
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: 3649 Arnold Tutoring
Yield to Maturity Formula - Approximation
 
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In this tutorial, you’ll learn how to approximate the Yield to Maturity (YTM) of a bond, including how you might modify it to cover Yield to Call and Yield to Put as well as real-life scenarios with debt investing. http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Table of Contents: 1:14 Part 1: The Yield to Maturity (YTM) and What It Means 5:27 Part 2: How to Quickly Approximate YTM 10:19 Part 3: How to Extend the Formula to Yield to Call and Yield to Put 13:32 Part 4: How to Use This Approximation in Real Life 16:27 Recap and Summary Part 1: The Yield to Maturity (YTM) and What It Means Yield to Maturity is the internal rate of return (IRR) from buying the bond at its current market price and holding it to maturity. Assumption #1: You hold the bond until maturity. Assumption #2: The issuer pays all the coupon and principal payments, in full, on the scheduled dates. Assumption #3: You reinvest the coupons at the same rate. Intuition: What’s the *average* annual interest rate % + capital gain or loss % you earn from the bond? You can use the YIELD function to calculate this in Excel: =YIELD(Settlement Date, Maturity Date, Coupon Rate, Bond Price % Par Value Out of the Number 100, 100, Coupon Frequency) For example, if you buy a 5% bond for 96.23% of its par value on December 31, 2014, and hold it until its maturity on December 31, 2024, you could enter: =YIELD(“12/31/2014”, “12/31/2024”, 5%, 96.23, 100.00, 1) = 5.500% You could also project the cash flows from the bond and use the IRR function to calculate YTM, but this will work only for annual periods and annual coupons. Part 2: How to Quickly Approximate YTM Approximate YTM = (Annual Interest + (Par Value – Bond Price) / # Years to Maturity) / (Par Value + Bond Price) / 2 Intuition: Each year, you earn interest PLUS an annualized gain on the bond price if it’s purchased at a discount (or a loss if it’s purchased at a premium). And you earn that amount on the “average” between the initial bond price and the amount you get back upon maturity. For example, on a 10-year $1,000 bond with a price of $900 and coupon of 5%: Annual Interest = 5% * $1,000 = $50 Par Value – Bond Price = $1,000 – $900 = $100 (Par Value + Bond Price) / 2 = ($1,000 + $900) / 2 = $950 Approximate YTM = ($50 + $100 / 10) / $950 = $60 / $950 = ~6.3% There are a few limitations: the approximation doesn’t work as well with big discounts or premiums to par value, nor does it work as well with different settlement and maturity days. It also will not handle floating interest rates since it assumes a fixed coupon. Part 3: How to Extend the Formula to Yield to Call and Yield to Put Call options on bonds let companies redeem a bond early when interest rates have fallen, or its credit rating has improved, meaning it can refinance at a lower rate. Usually, the company has to pay a premium to par value to call the bond early. Put options are the opposite, and let investors force early redemption (usually when interest rates have risen, or the company’s credit rating has fallen). Approximate Yield to Call or Yield to Put = (Annual Interest + (Redemption Price – Bond Price) / # Years to Maturity) / ((Redemption Price + Bond Price) / 2) For example, to calculate the Yield to Call on a 10-year $1,000 bond with a price of $900, coupon of 5%, and a call date 3 years from now at a redemption price of 103: Approximate YTC = ($50 + ($1,030 – $900) / 3) / (($1,030 + $900) / 2) Approximate YTC = ($50 + $43) / $965 = $93 /$965 = ~9.7%, which you can estimate as “just under 10%” Part 4: How to Use This Approximation in Real Life Example: You’re at a credit fund that targets a 10% IRR on investments in high-yield debt. JC Penney has a 4-year 7.950% bond that’s currently trading at 91.75 (as in, 91.75% of par value). This seems like an easy “yes”: you get around 8% interest per year + an 8% discount / 4, and ~10% / average price of 96% results in a yield just above 10%. BUT will a distressed company be able to repay the bond principal upon maturity? What if its financial situation worsens? You estimate that in the best-case scenario, you’ll get 65% of the principal back upon maturity (65% “recovery percentage”). The recovery percentage will be 47% and 13% in more pessimistic cases. Scenario 1 Approximate YTM: (8% – 27% / 4) / 78.5% = 1.6% Scenario 2 Approximate YTM: (8% – 45% / 4) / 69.5% = -4.7% So this is almost certainly a “No Invest” decision if these recovery percentages are accurate – even in the Upside Case, we’re far below 10%. RESOURCES: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula.xlsx
Bond Prices, Interest Rate & Yield Changes
 
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When interest rates go up, bond prices go down. Understanding the relationship between bond prices, interest rate changes and the bond's current yield is important for investors.
Views: 4504 InvestingForMe
What is the difference between bond yield and coupon rate
 
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What is the difference between bond yield and coupon rate - Find out more explanation for : 'What is the difference between bond yield and coupon rate' only from this channel. Information Source: google
Views: 22 gorden terpal
Investopedia Video: The Basics Of Bond Duration
 
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Duration tells investors the length of time, in years, that it will take a bond's cash flows to repay the investor the price he or she paid for the bond. A bond's duration also tells investors how much a bond's price might change when interest rates change i.e. how much risk they face from interest rate changes.
Views: 92347 Investopedia
Level I CFA® Tutorial: Fixed Income - Reinvestment Assumption in Calculating Yield to Maturity: YTM
 
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Download Fixed Income Question Bank: http://www.edupristine.com/ca/free-10-day-course/cfa-fixed-income/ http://www.edupristine.com - KickStart your CFA® prep with EduPristine. Get free consultation from our experts, drop a mail at: [email protected] CFA® is considered as the global passport to the world of finance. The CFA® Program bridges industry practice, investment theory, and ethical and professional standards to provide investment analysis and portfolio management skills. Subscribe for more updates: http://www.youtube.com/user/edupristine?sub_confirmation=1 For more videos log onto http://www.youtube.com/edupristine Find us on Facebook at https://www.facebook.com/edupristine Find us on google plus https://plus.google.com/112352201586522582395/posts Follow us on Twitter: https://twitter.com/edupristine YTM (Yield to Maturity): of a bond or other fixed-interest security, such as gilts, is the internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond will be held until maturity, and that all coupon and principal payments will be made on schedule. About EduPristine: Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, EduPristine is one of the leading Training provider for Finance Certifications like CFA®, PRM, FRM, Financial Modeling etc. EduPristine strives to be the trainer of choice for anybody looking for Finance Training Program across the world.
Views: 3335 EduPristine
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: 353763 Khan Academy
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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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: 174524 TeachExcel
Bond Valuation YTM Yield to Maturity - CA Final SFM (New Syllabus) Classes & Video Lectures
 
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For More Visit our website - https://sfmguru.in/ Buy Rewamp & revise the entire SFM in 1 day: https://sfmguru.in/revamp-ca-final-sfm-revision-book/ Subscribe to Channel for more videos: https://www.youtube.com/channel/UCiPzkqrzDsoq-pLrloT7Fcw/featured 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. #Bonds , #Finance , #CAFinal , #FinancialLearning , #CAFinalSFM , #StrategicFinancialManagement , #SFM ,
Views: 301 Nikhil Jobanputra
Calculating the Forward Rate
 
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This video shows how to calculate the Forward Rate using yields from zero-coupon bonds. A comprehensive example is provided along with a formula to show how the Forward Rate is computed based on zero-coupon yields. 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: 72433 Edspira
Bond Semi-annual Yield-to-Maturity
 
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Bond Semi-annual Yield-to-Maturity
Views: 13615 Prof. Mohammed Ahmed

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