Bonds A Step by Step Analysis with Excel
Bonds. A Step by Step Analysis with Excel is a book that aims to help investors make a financial analysis of risk-return relation using spreadsheets in a step-by-step procedure. With the incorporation of financial mathematics, this book teaches you how to price a bond and calculate the most popular measure of return, while describing a step-by-step procedure to design the cash flow in a spreadsheet. This book also describes the mechanics to calculate the duration, modified duration and convexity for real bonds using spreadsheets as a measure of price volatility.
BONDS. A STEP BY STEP ANALYSIS WITH EXCEL CONTENTS
CHAPTER ONE
•Designing the cash flow for a particular investment amount
•Pricing a bond and calculating its yield to maturity, using an Excel spreadsheet.
•Calculating the total return for an investment horizon.
•Performing a sensitivity analysis of price, yield and total return.
CHAPTER TWO
•Understanding the price-yield relationship of an option-free bond.
•Calculating the duration, modified duration and convexity for real bonds using Excel spreadsheets.
•Understanding why duration is a measure of a bond´s price sensitivity to yield changes.
•Understanding the limitations of the duration as a measure of price volatility and how the duration estimation can be adjusted for a bond´s convexity.
CHAPTER THREE
•Understanding that the IRR is not always a good measure of the annual return.
•Identifying situations in which the yield requires an additional interpretation.
•Calculating a portfolio return, when there are deposits and withdrawals in a brokerage account.
CHAPTER FOUR
•Calculating the different measures of a portfolio return, with and without external cash flows.
•Understanding their limitations, advantages and disadvantages.
CHAPTER FIVE
•Explaining the spot rates, forward rates and the famous yield curve.
•Describing techniques that use matrixes which is simpler and faster
CHAPTER SIX
•Describing how to immunize the return of a bond portfolio using the concepts of duration and convexity, how to rebalance the duration of the portfolio and the cash flow matching technique.