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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Edspira

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: 24690
Elizabeth Schmitt

An example of pricing a zero-coupon bond using the 5-key approach.

Views: 37882
Kevin Bracker

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
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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
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Views: 8689
Edspira

This video explains how to calculate the yield to maturity (YTM) of a zero coupon bond using the lump sum formula.

Views: 375
Michael Padhi

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
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Views: 80897
Edspira

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

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: 54570
Investopedia

In this video, you will learn to find out yield to maturity for a bond.

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maxus knowledge

How to use the quadratic formula or Wolfram Alpha to calculate the yield to maturity of a 2 period coupon bond.

Views: 3348
Rob Munger

What are chatacteristics of zero coupon bonds? What is bond market? How can we compare two different bonds? How to calculate the yield to maturity of a bond?

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Infermath

describes pricing of zero coupon bonds and introduces continuous compounding

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yaacov kopeliovich

ABM - Advanced Bank Management Numerical Problems Solved bonds, ytm, yield to maturity
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Learning sessions

Accounting for a zero coupon bond issued at a discount (issue price less than face value) interest calculation and balance sheet recording, start with a cash flow diagram, face (maturity) value, no stated rate of interest on bond and no interest payments (usually semi-annual), discount the face (maturity) value using the market rate of interest to the issue (purchase) date to determine its present value (purchase price) the difference between the face value (FV) and its present value (PV) equals the discounted amount which equals the profit or expense, the discounted amount has to be amortized to determine the interest payable (receivable) and interest expense (revenue) recognized, the amortization schedule is calculated as (market rate of interest x beginning carrying value = amortized interest, add to beginning carrying value to determine new carrying (book) value, detailed calculations with balance sheet journal entries for bond payable (receivable), discount bond payable (receivable), interest expense (revenue), etc., by Allen Mursau

Views: 5433
Allen Mursau

Importing python library:
https://docs.python.org/2/library/math.html
Calculating yield-to-maturity of a zero coupoun bond based on price and vice versa.

Views: 215
Infermath

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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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CA Nikhil Jobanputra

What is a Zero-Coupon Bond? How Do Zero Coupon Bonds Work? - Please take a moment to Like, Subscribe, and Comment on this video! View Our Channel To See More Helpful Finance Videos - https://www.youtube.com/user/FinanceWisdomForYou
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What is a Zero-Coupon Bond? How Do Zero Coupon Bonds Work?
The maturity dates on zero coupon bonds are usually long-term—many don’t mature for ten, fifteen, or more years. These long-term maturity dates allow an investor to plan for a long-range goal, such as paying for a child’s college education. With the deep discount, an investor can put up a small amount of money that can grow over many years.
Investors can purchase different kinds of zero coupon bonds in the secondary markets that have been issued from a variety of sources, including the U.S. Treasury, corporations, and state and local government entities.
What is a Zero-Coupon Bond? How Do Zero Coupon Bonds Work?
Zero coupon bonds are sold at a substantial discount from the face amount. For example, a bond with a face amount of $20,000, maturing in 20 years with a 5.5% coupon, may be purchased for roughly $6,757. At the end of the 20 years, the investor will receive $20,000. The difference between $20,000 and $6,757 represents the interest that compounds automatically until the bond matures
Finance Wisdom For You Finance Wisdom For You
What is a Zero-Coupon Bond? How Do Zero Coupon Bonds Work?

Views: 4672
Finance Wisdom For You

#fin-ed
Zero Coupon Bond Explained | Calculating the Yield of a Zero Coupon Bond | FIN-Ed
In this video, I will explain what a zero-coupon bond is and how to calculate its yield to maturity.
A zero-coupon bond is 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.
thanks for watching....!!!

Views: 34
FIN-Ed

Valuing a Coupon Bond. This is an extension of the previous video on "What is a Bond?" A knowledge of the time value of money is necessary.
For more questions, problem sets, and additional content please see: www.Harpett.com.
Video by Chase DeHan, Assistant Professor of Finance at the University of South Carolina Upstate.

Views: 3520
Harpett

This video explains the meaning of the yield to maturity (YTM) of a coupon bond in the coupon bond valuation formula and how to calculate the YTM using a financial calculator.

Views: 615
Michael Padhi

Here I use Mathetmatica to illustrate how the first derivative of the price of a zero-coupon bond (with respect to yield) is the dollar duration of the bond. Notice that the first derivative, as the slope of the tangent line, is not the same thing as "duration." Rather, the first derivative is the dollar duration and it is "infected" by the bond's price. That means, in this case (i.e., continuous compounding), we can divide out the price to get the modified duration (30 for a zero coupon bond with 30 year maturity). For more financial risk videos, visit our website! http://www.bionicturtle.com

Views: 20142
Bionic Turtle

How to calculate and record a gain or loss on the sale of a zero coupon bond, start with a cash flow diagram, face (maturity) value, no stated rate of interest on bond and no interest payments (usually semi-annual), discount the face (maturity) value using the market rate of interest to the issue (purchase) date to determine its present value (purchase price) the difference between the face value (FV) and its present value (PV) equals the discounted amount, amortize the discount (market interest rate x bond carrying value), to determine any gain or loss on the sale of the zero coupon bond before its maturity date (Cash received on sale minus the amortized carrying (book) value = gain or loss), also the amortized discount amount for the period is the interest revenue (expense) recognized each period, detailed calculations and accounting for the journal entries, bond payable (receivable), discount bond payable (receivable), interest revemue (expense) by Allen Mursau

Views: 1429
Allen Mursau

Just as (Macaulay) duration is weighted average maturity of bond, convexity is weighted average of maturity-squares of a bond (where weights are PV of bond cash flows). Dollar convexity is also the second derivative (d^2P/dy^2); i.e., the rate of change of dollar duration.
Note: the corresponding blog entry at our website contains the downloadable spreadsheet I used here.

Views: 54847
Bionic Turtle

A zero-coupon bond with maturity of ten (10) years has a 6% bond-equivalent yield (semi-annual compounding). What is the bond's modified duration?

Views: 23154
Bionic Turtle

"What Is A Zero Coupon Bond Example?
How do you calculate a zero coupon bond?
Calculating Zero-Coupon Bond Price. To figure the price you should pay for a zero-coupon bond, first divide your required rate of return by 100 to convert it to a decimal. Second, add 1 to the required rate of return as a decimal. Third, raise the result to the power of the number of years until the bond matures.
Are zero coupon bonds risk free?
Federal agencies, municipalities, financial institutions and corporations issue zero-coupon bonds. ... Like virtually all bonds, zero-coupon bonds are subject to interest-rate risk if you sell before maturity. If interest rates rise, the value of your zero-coupon bond on the secondary market will likely fall."

Views: 789
Hadassah Hartman

Bond Semi-annual Yield-to-Maturity

Views: 14441
Prof. Mohammed Ahmed

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: 9228
Arnold Tutoring

What is ZERO COUPON BOND? What does ZERO COUPON BOND mean? ZERO COUPON BOND meaning - ZERO COUPON BOND definition - ZERO COUPON BOND explanation.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.
A zero-coupon bond (also discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. Note that this definition assumes a positive time value of money. It does not make periodic interest payments, or have so-called "coupons", hence the term zero-coupon bond. When the bond reaches maturity, its investor receives its par (or face) value. Examples of zero-coupon bonds include U.S. Treasury bills, U.S. savings bonds, long-term zero-coupon bonds, and any type of coupon bond that has been stripped of its coupons.
In contrast, an investor who has a regular bond receives income from coupon payments, which are made semi-annually or annually. The investor also receives the principal or face value of the investment when the bond matures.
Some zero coupon bonds are inflation indexed, so the amount of money that will be paid to the bond holder is calculated to have a set amount of purchasing power rather than a set amount of money, but the majority of zero coupon bonds pay a set amount of money known as the face value of the bond.
Zero coupon bonds may be long or short term investments. Long-term zero coupon maturity dates typically start at ten to fifteen years. The bonds can be held until maturity or sold on secondary bond markets. Short-term zero coupon bonds generally have maturities of less than one year and are called bills. The U.S. Treasury bill market is the most active and liquid debt market in the world.

Views: 2381
The Audiopedia

How to calculate and record the sale of a zero coupon bond, start with a cash flow diagram, face (maturity) value, no stated rate of interest on bond and no interest payments (usually semi-annual), discount the face (maturity) value using the market rate of interest to the issue (purchase) date to determine its present value (purchase price) the difference between the face value (FV) and its present value (PV) equals the discounted amount, amortize the discount (market interest rate x bond carrying value), to determine any gain or loss on the sale of the zero coupon bond before its maturity date (Cash received on sale minus the amortized carrying (book) value = gain or loss), also the amortized discount amount for the period is the interest revenue (expense) recognized each period, detailed calculations and accounting for the journal entries, bond payable (receivable), discount bond payable (receivable), interest revemue (expense) by Allen Mursau

Views: 2370
Allen Mursau

This video is about computing zero-coupon bond using excel.

Views: 801
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ASWINI BAJAJ

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
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To follow Michael on Twitter, visit
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Views: 83616
Edspira

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: 139404
Bionic Turtle

For a zero coupon bond, calculate current price, given face value, yield to maturity, and years to maturity, using excel.

Views: 271
abualef

Calculation of the theoretical Treasury spot rate curve using bootstrapping and the value of a bond using spot rates.

Views: 27647
EduPristine

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: 11719
Matt Thomas

"Why Would You Buy A Zero Coupon Bond?
What is the point of a zero coupon bond?
A zero-coupon bond (also discount bond or deep discount bond) is a bond where the face value is repaid at the time of maturity. Note that this definition assumes a positive time value of money. It does not make periodic interest payments, or have so-called coupons, hence the term zero-coupon bond.
Why would a company issue a zero coupon bond?
Zero-coupon bonds are bonds that do not make any interest payments (which investment professionals often refer to as the “coupon”) until maturity. This means that if you buy today a zero-coupon bond that matures in 20 years, you won't put a single penny worth of interest income in your pocket for two decades.
"

Views: 315
Hadassah Hartman

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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Views: 376445
Khan Academy

Strategic Financial Management : Chartered Accountancy;
Bond Valuation | Zero Coupon Bonds | Deep Discount Bond | Perpetuity Bond | Callable Bond | Part 4;
Revision : 00:00:20 - 00:01:08
Topic Covered :
1. Zero Coupon Bonds [CA Final May'12] : 00:01:14 - 00:03:04
- Issued at discount and redeemed at par
- No interest is paid on zero coupon bonds before maturity
- Major advantage for issuer- no cash outflow before maturity
2. Deep Discount Bonds :00:03:05 - 00:05:06
3. Perpetuity Bond : 00:05:07 - 00:05:52
4. Callable Bonds : 00:05:54 - 00:09:38
-Example
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Edupedia World

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
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I Hate Math Group, Inc

Example: Purchase 6% coupon interest rate bond for $1,000 with 10 years to maturity. Sell the bond in one year when interest rates are 9%. What's the investor's rate of return?

Views: 177
1sportingclays

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

Video shows what zero coupon bond means. A bond (e.g., corporate debenture or government debt) that has no coupon (i.e., pays no interest), during the life of the issue. Such a bond is initially sold at a discount to its face value. The rate of return to the holder is derived from the gradual appreciation as the security moves toward maturity.. Zero coupon bond Meaning. How to pronounce, definition audio dictionary. How to say zero coupon bond. Powered by MaryTTS, Wiktionary

Views: 692
SDictionary