Bond spreadsheet

You can use Excel to create a bond amortization table even if you have only modest skill in using the program. You will need to know how to name, format and copy cells as well as how to enter calculations to complete this table, which assumes straight-line amortization.

Bond spreadsheet

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Click here to learn more A bond is a debt instrument, usually tradeable, that represents a debt owed by the issuer to the owner of the bond.

Most commonly, bonds are promises to pay a fixed rate of interest for a number of years, and then to repay the principal on the maturity date. The purpose of this section is to show how to calculate the value of a bond, both on a coupon payment date and between payment dates. If you aren't familiar with the terminology of bonds, please check the Bond Terminology page.

If you aren't comfortable doing time value of money problems using Excelyou should work through those tutorials first. Please note that this tutorial works for all versions of Excel, including Excel Furthermore, the functions presented here should also work in other spreadsheets such as Open Office Calc.

You can download a spreadsheet that accompanies this tutorial, or create your own as you work through it. You may also be interested in my tutorial on calculating bond yields using Microsoft Excel. Bond Cash Flows As noted above, a bond typically makes a series of semiannual interest payments and then, at maturity, pays back the face value.

Let's look at an example: The bond has three years until maturity and it pays interest semiannually, so the time line needs to show six periods.

Therefore, the time line looks like the one below: We will use this bond throughout the tutorial. Bond Valuation on a Coupon Date We will begin our example by assuming that today is either the issue date or a coupon payment date.

In either case, the next payment will occur in exactly six months. This will be important because we are going to use the TVM Solver to find the present value of the cash flows.

Free Bond Valuation - Yield to Maturity spreadsheet

The value of any asset is the present value of its cash flows. Therefore, we need to know two things: The size and timing of the cash flows. The required rate of return discount rate that is appropriate given the riskiness of the cash flows.

We have already identified the cash flows above.

Bond spreadsheet

Take a look at the time line and see if you can identify the two types of cash flows. Using the principle of value additivitywe know that we can find the total present value by first calculating the present value of the interest payments and then the present value of the face value.

Adding those together gives us the total present value of the bond. We don't have to value the bond in two steps, however. The PV function can handle this calculation as we will see in the next example: Assuming that your required return for the bond is 9. We can calculate the present value of the cash flows using the PV function, but we first need to set up our worksheet.

Open a new workbook, and then duplicate the worksheet presented below: Note that I have set up the data using annual values for the coupon rate, required return, and term to maturity.

Calculate PV of different bond type with Excel | Investopedia The amount needed or desired at the end of the holding period is not necessary we assume it to be the bond's face value. Here is an easy step to find the value of such a bond:

I have also included a cell B6 that provides a place to specify the number of payments per year. This way, we can set up the formula without making assumptions regarding the payment frequency, which adds some flexibility since not all bonds pay semiannually.

To calculate the value of the bond, in B8, we use the PV function: If I didn't put that there, then the function would have returned a negative value. Technically, that would be correct because you would have to pay a cash outflow that amount.

The Bottom Line

However, we tend to think in terms of positive dollars, not negative.Demonstrates how to perform bond valuation on a payment date and between payment dates using Microsoft Excel and its built-in functions.

The Fidelity Bond Ladder Tool can help you build a portfolio of bonds that mature at staggered intervals. These intervals are the "rungs" of the ladder, which are designed to help create a consistent stream of income over time. Intuitive design allows you to build your ladder on one page that.

This spreadsheet also calculates the Yield to Maturity which is the interest rate that the bond holder receives if he holds the bond to maturity. The spreadsheet distinguishes between the Annual Percentage Rate and the Effective Annual Rate.

Since we will use the same example as in my tutorial on calculating bond values using Microsoft Excel, the spreadsheet is the same. The expected rate of return on .

A Comprehensive Bond Portfolio Tracking Spreadsheet

Apr 30,  · How to Calculate Bond Value in Excel. In this Article: This article provides step-by-step instructions on how to create a bond value calculator in an Excel spreadsheet.


Bond spreadsheet

Method 1. Format the Bond Value Calculator. 1. Type the column heading and data 78K. To determine the value of a bond today — for a fixed principal (par value) to be repaid in the future — we can use an Excel spreadsheet.

Microsoft Excel Bond Valuation |