14 Jun Question Module 2 – Background PRESENT VALUE AND BOND VALUATION Required Reading
Question
Module 2 – Background
PRESENT VALUE AND BOND VALUATION
Required Reading
To start off this class, take a look at these three short videos. The first two cover present value in general, and the third video covers a specific application of present value to pricing a bond:
Clifford, J. (2014). Time value of money. ACDC Leadership. https://www.youtube.com/watch?v=nfkqCv3Rd_g
Khan, S. (2008). Introduction to present value. Khan Academy. https://www.youtube.com/watch?v=ks33lMoxst0&t=483s
Davis, A. (2016). Bond pricing. Retrieved from: https://www.youtube.com/watch?v=-DnARyndirI
Now read up in more detail on these topics. Pay special attention to the examples of how to calculate present value, and how to use Excel:
Ross, S., Westerfield, R., & Jordan, B. (2007) Chapter 5: Introduction to valuation: The time value of money. Fundamentals of Corporate Finance. McGraw Hill. http://highered.mheducation.com/sites/dl/free/0078034639/941423/Sample_Chapter.pdf
Ross, S., Westerfield, R., & Jordan, B. (2007) Chapter 6: Interest rates and bond valuation. Corporate Finance. McGraw Hill. Retrieved fromhttp://course.sdu.edu.cn/G2S/eWebEditor/uploadfile/20121125110341494.pdf
Finally, take a look at these videos on how to calculate present value using Microsoft Excel. These videos will take you through these calculations step by step:
Davis, J. (2013). Present value of a single amount in Excel. Retrieved from: https://www.youtube.com/watch?v=ruIfnNoe1Co&t=85s
Moy, R. (2014). Present value of multiple cash flows in Excel. Retrieved from: https://www.youtube.com/watch?v=kDOIuJbHpLc
Moy, M. (2014). Bond valuation in Excel. Retrieved from: https://www.youtube.com/watch?v=H-_NP0UxX_U
You can also view a spreadsheet with the calculations from this video if you want to try this example out on your own].
Optional Reading
GCFLearnFree.org. (2016). Excel 2016: Functions. Retrieved from: https://www.youtube.com/watch?v=-9d4m79twdA
Brigham, Davies (2013). Chapter 28: The time value of money. Intermediate Financial Management. Cengage Learning. Retrieved from: http://www.cengage.com/resource_uploads/downloads/0324594690_148107.pdf
Gitman, L. (2005). Chapter 6: Interest rates and bond valuation. Principles of Managerial Finance. Pearson Education. Retrieved from: http://wps.aw.com/wps/media/objects/222/227412/ebook/ch06/chapter06.pdf
Alternative links for Gitman article and video PowerPoint version of this chapter:
http://wps.aw.com/wps/media/objects/338/347080/ebook/ch06/chapter06.pdf
https://mbagroup12.files.wordpress.com/2012/03/gitman_12_prnc-mgt-fin13e_password_downloadslide_10.pdf
Bierman, H. (2010). Chapter 2: The time value of money. An Introduction to Accounting and Managerial Finance: A Merger Of Equals. Singapore: World Scientific. [EBSCO eBook Colllection]
Droms, W. G., & Wright, J. O. (2015). Chapter 11: Mathematics of compound interest. Finance a
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