Calculating the Yield of a Zero Coupon Bond

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  • Опубликовано: 12 апр 2015
  • 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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Комментарии • 25

  • @TaxTimeForever
    @TaxTimeForever 14 дней назад +1

    I always find myself coming back to Edspira. Thank you so much; you are a true legend!

  • @mechagotenks3169
    @mechagotenks3169 6 лет назад +13

    OH MY GOD THANK YOU! YOU LITERALLY JUST SAVED MY LIFE BECAUSE THE BOOK MADE IT SO COMPLICATED AND YOU EXPLAINED SO SIMPLE.THANK YOU!

    • @Edspira
      @Edspira  6 лет назад +1

      No problem. Glad to help!

    • @kevinyu8320
      @kevinyu8320 6 лет назад

      Same here. Your video helped me refresh my memory since my corporate finance book explains it so much more complicated than my accounting textbooks :x
      Thank you!!!

  • @changeme454
    @changeme454 3 года назад +2

    The way of explaining is very convincible! The first starts with very elementary math and then the continuation is just epic.

  • @showkatahmadlone7154
    @showkatahmadlone7154 2 года назад +1

    Thankuuu sir
    For the concept clarification
    ❤❤❤

  • @red2838
    @red2838 Год назад

    Great Video! The fact I actually asked myself what would happen if the zero bond would have a longer time to maturity…

  • @ilad3689
    @ilad3689 4 года назад

    thank you so much

  • @ericorenato88
    @ericorenato88 5 лет назад +2

    I am having a problem when putting it into months. for example 16 months.

  • @sohaabdullrahman6727
    @sohaabdullrahman6727 8 лет назад +7

    what if the yield was on 3 mth, with 67 days to maturity, how we calculate that

    • @gstlb
      @gstlb 6 месяцев назад +1

      I think the n in the final equation would be 4, that is, 1 / .25 but remember the YTM is for a year not 3 months

  • @frankrizzo7781
    @frankrizzo7781 2 года назад

    What would the equation be if face value is the unknown. I can't remember how to solve for ^1/n. YTM +1=(FV/DISCOUNT)^1/n
    In 1982 at of 10 I received 5k and talked my father into buying 10 year zero coupons that paid 12.99 %. I want to figure out thr discount on the 1000 dollar bonds.

  • @Luke-nh5tu
    @Luke-nh5tu 5 лет назад +1

    Wouldn't it be the same if you take initial 5% rate divided that by the number of years ? Instead of making the whole new calculation.. just curious if it would be accurate

  • @lurch4872
    @lurch4872 6 лет назад

    What happens if interest rates become negative ?How do you calculate the value of the Bond then ?

  • @summitacharya3278
    @summitacharya3278 2 года назад

    Sir how to find maturity in redeemable bond

  • @abdurehmankhan1333
    @abdurehmankhan1333 11 месяцев назад

    this is increadibe

  • @supercupcake119
    @supercupcake119 6 лет назад +1

    How would u calculate it If you were only given a par value, a current market rate, semi- annual compounding, and a 5 yr period?

    • @Edspira
      @Edspira  6 лет назад +2

      I have a seperate video that explains this in more detail: ruclips.net/video/O2W935hzYpQ/видео.html. Your formula is: Zero Coupon Bond Value = F/(1+r)^t where r=market rate divided by 2 since it is paid semi-annually, and t=5x2 (10 payment periods since it is semi-annual). Also, a zero coupon bond is also known as a discount bond. I hope this helps. Good luck!

  • @summitacharya3278
    @summitacharya3278 2 года назад

    What if Vd is not given
    How to calculate rate of return?

  • @arieskatkov467
    @arieskatkov467 6 лет назад

    you should have more subs

  • @eddieteabagify
    @eddieteabagify Год назад

    worthless info unless you buy on the day of issuance. what happens when you buy on the secondary market 36 days after it was issued.

    • @Edspira
      @Edspira  Год назад +1

      Eddie, I have an entire playlist called "chapter 14: long-term liabilities" (www.edspira.com/index-financial-accounting). It sounds like you were interested in the videos on amortizing a bond discount and premium. Best of luck in your studies!

    • @ablelopez2904
      @ablelopez2904 Год назад

      @@Edspira where did the 1 come from on the equation?