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Alan Cring Productions in association with the Emergent Light Studio presents

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the Illinois State Collegiate Compendium, Academic Lectures in Business and Economics.

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This is Business Finance, FIL 240 for spring semester 2024.

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Today, bond price and yield calculations.

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Later in just a little while, I will bring up an Excel spreadsheet that will help with the process of doing these calculations

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amazingly more efficiently than you would be able to do it on even a financial calculator.

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A normal one. However, just to begin this happy time together, we are going to look at the numbers

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and see what this exciting day has to offer us.

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As you can see, this is actually a bull day, but the bull part of it really happened right at the opening bell

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and from there it just kind of wandered a little bit down, kind of aimlessly, up about a third of a percent.

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The standard port is a little riskier portfolio, up more than three quarters of a percent.

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And the NASDAQ, the riskiest, is the most magnified of the bull market, bull indicators, at more than one percent up.

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So it is definitely a good day, but the good news happened right off the bat.

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And after that, it just kind of wandered, sank down kind of quietly through the day a little bit.

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And right now it's just sort of just sitting there waiting for the end of the day to occur.

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But still, a bull day is a bull day, so we can celebrate that.

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But then going over here, having a look at the crude oil, it is now in a new trading range.

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There's no question about it. That's 72 to 79 is dead.

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And now we're in an 81 to probably about 87 on the price of crude.

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Now, one factor would be the uptick in the economy, more use of hydrocarbon products.

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Which is good news, but there are still these persistent rumors that some of this, at least some of this price rise,

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is because the Saudis and the Russians have got a deal going on where they restrict their supply of oil they're putting out to cause the price to go up.

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And how long, if that's true, yeah, I guess I read it is true, but how long that's going to hold is speculative.

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Agreements like that tend to break down very quickly.

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But we will see gasoline prices tick up, maybe 369, 379 a gallon within a week on this rise in crude oil prices.

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Gold, it left that $2,000 neckline in the dust, and now it is up there.

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It's in the range from $2,150 to $2,200 now.

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It had a drop off last night, but then it surged back, and it's right about sitting about where it was before the excitement.

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That's the gold bugs are all excited about something. I'm not sure what.

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But silver, as you can see, silver is not showing that same uptick because silver is not a source, it doesn't have such a speculative component to it.

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It's just sort of sitting there, all the metals are not doing much at all lately.

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But gold has been on a roar mostly because of the excitement that some apocalypse is going to happen, I guess.

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Now bonds are up, the yields are up 3.4 basis points.

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Generally, which would mean, of course, that the price is going down, as we will see in numerical detail in this lecture that's coming up today.

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There's a sell-off in the bond market, selling of bonds drives the price down, drives the yield up.

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Now behind the scenes, the Fed has generally earned praise for having a good control and getting inflation down.

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But the last number was a little uptick in inflation, which means the Fed is not going to be cutting interest rates soon,

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which is probably one of the things causing yields to go up.

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But also, on the other hand, the Fed has been signaling that there will be rate cuts later this year.

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So markets are in kind of this, well, are rates going to go down or not?

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And so that creates volatility in the price of bonds and therefore in the yield.

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And that's what we're seeing now, is an uncertainty about where bond prices and bond yields are going to go,

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therefore where interest rates are going to go, and where the economy is going to go from there.

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Difficult to call, but we'll see a lot about prices and yields in the lecture today.

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Now taking it over here, seeing what's happening in other parts of the world, the Nikkei had a good surge in the early trading that would be last night here.

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And then it just sort of floated along, just slowly rising. At the end it was up 2 and 2 thirds percent.

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That is a strong up day. So Tokyo was in a good mood, the bulls were in charge.

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But of course then you come over here to London, and London just up and down, just volatile.

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It finished up right about where it started, not a little tiny bit down, but nothing significant at all.

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So who knows what's going on over there. But you do see, interestingly enough, this rise in bond yield prices here in the United States,

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bond yields went up, bond prices went down. That means that there was selling of bonds.

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Well interestingly enough, that looks like that's what fueled the equities. They're getting rid of bonds and buying stocks.

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And so that's good news, whether there's a bullish sentiment in the market, how long it's going to last is anybody's guess,

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but overall we do see the economy improving and all that good stuff. So that's good news for stocks.

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Now, I'm going to go through a couple of terminology, and some of this is a repeat, just to give us a running start on bonds.

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And these terms will translate into use in the Excel sheets, what we mean by different things.

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Now, let me think here. Bonds, the first thing that you need to know is the face value of a bond.

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What we call face or par is another term for it. And that is $1,000 or a quote of 100, which is a tenth of a thousand.

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Now strangely enough, Excel wants you to give it the price for one calculation, but it wants you to give it the quote for the other calculation.

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We will have the price and we'll find the yield, or we'll have the yield and we'll find the price.

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If you know the yield and you're looking for the price, it'll be just the price, based upon actual money.

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If you know the price but you're finding the yield, you will have to give it the quote of the price.

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In other words, on the 100. So the bond actually has a price of $980. For that one side, you'd use $980.

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On the other side, you'd use $98. And I make it clear in the Excel sheet what you want to use.

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Okay, that's the face value of it. Now, going from there, the coupon rate, that will be the APR, the loan interest rate.

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It will be the number you see as a percent right beside the symbol. So if I were to say JLX 8%, that's the coupon rate right there.

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And what that means is that the owner of the bond, the investor, will get $80 per year.

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Your book starts out by saying, use $80 per year. Later in that chapter, they'll say, actually, in reality,

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it's $40 per half year. All you have to do is tell the Excel sheet, one coupon payment a year or two.

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You don't have to know the numbers, the actual calculation. You just say a one or a two,

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and that will tell you whether the coupon is paid annually or in two semi-annual installments.

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That's all you have to do. Now, other things. The settlement date.

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Now, oftentimes, when we're using the terms in actual finance, oftentimes we'll use just the first word.

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What's the face? What's the coupon? What's the settlement? Now, the settlement date is the day that the bond went live for trading.

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Original issue. It actually doesn't have much meaning whatsoever. In reality, it's just historical information.

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Well, that's nice. What really matters is the maturity date.

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On what day does the bond retire and the investor get his $1,000 back?

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Now, the term of a bond is nothing but the maturity date, maturity minus now. How long does the bond have left to live?

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Now, the problem here is that the maturity date and the settlement date are month, day, and year kind of things.

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In this class, all you have to worry about is the difference in the year now and the year that it matures.

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So if I said that JLX 8%, 2032, that would mean that the term is nothing but eight years. Eight.

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That's what you'll have to know. I've made it so that when you open the Excel sheet, settlement date is there.

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You don't have to worry about that at all. And the maturity date, once you write in the number of years, the maturity date will fix too.

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All you have to do is know the number of years. And the problem is, of course, that the dates of the date of maturity might be different from the date now.

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Just use the number of years. Don't get into the months and days. Not here in this class, not even in my a little bit more advanced class.

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It gets complicated. Just say, okay, the term is eight years. That's all you have.

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Now, in this regard, there are two subterms here. This first one, you wouldn't probably ever see. Best term.

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But then there's another one, worst term.

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What I mean by worst term is that some bonds could actually end before the maturity date.

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Like a call provision is an example. That JLX 8% 2032, it might have a call provision that starts in 2028.

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In other words, in 2028, the company could just retire the bond to say it's done, or the investors could put the bond, call the bond, put the bond.

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They could say, okay, pay us off. It's 2028, pay us off. But it said 2032, it doesn't matter. We've hit the date we want it back.

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So the worst would be like a call. JLX 8% 2032, callable in 2028.

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Oh, so if you want to know the best, you'd use eight years. If you wanted to know the worst, you would put in for the term thing, four years.

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Pain in the backside that one is. Okay, here we go.

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Now, another thing to bring up here is the coupon.

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That's just that right there, times a thousand.

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Normally, you're not going to need in the Excel the actual dollar amount. You just tell it to coupon.

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And some coupons are just a whole percentage. Some are one decimal point, 8.2%. Others are two, 8.25.

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There are even three decimal point. I saw a CVS bond. I can't remember much about it. But it was something like 5.625%.

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Something like that. But you just put in the coupon, whatever it is.

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Now, the price. I might have already talked about this, but I'm going to do it again just so you have it.

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There is a clean price and a dirty price.

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The clean price is what you see for the quote. The dirty price is what you'd actually pay.

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Let me explain. Suppose that you, madam, you own one of these JLX bonds.

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You got a coupon three months ago.

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You got your $80 check in the mail, and so you could buy dinner and some extra fancy food for the cats and all that.

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And now, so the next one, one year after that, there will be another $80 coupon.

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But three months after you got your coupon, you sold it to me. You sold it to me.

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Now, I saw the quote and I bought it, let's say, $1,015.

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$1,015.

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Well, I get the bond and I get an $80 coupon nine months later.

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And you would say, wait a minute, fat boy, I owned that stock for a fourth of that $80. That was my stock.

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In other words, I am not going to pay $1,015. I'm going to pay $1,015 times one-fourth of $80, which would be $1,035. $20 there.

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$1,035 is the dirty. That's what I'll get.

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This actually happened to me once. I didn't quite understand what had happened, and then I figured it out.

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It was like a thousand, no, I paid like $9.86 for it. That was the quote.

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But then what came out of my account was the $9.86 or something like that, plus like $12.

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So I thought, what the hell? Is that a fee, a commission? No, that was just what I owed the owner who had had the bond through part of that next coupon.

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So the dirty can kind of surprise you on these.

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So that's how the dirty, clean versus dirty. The quotes will be clean, always clean.

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You have to figure out for yourself what the dirty is. Okay, I bought it like 86 days before the next coupon.

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So 86 minus 6 months, 86 minus 9 minus 180 days. It can get a little bit hairy, but I mean, it's just one of those things that is part of the bond market.

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Because people don't wait until the instant of a coupon to sell it. They sell it at about any time.

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So they get to claim some of the next coupon. Like that.

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Now also, by the way, bonds work just like stocks do. As far as the price goes, there's a bid and there's an ask.

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The bid would be what you would sell your bond for. The ask is what you would buy that bond for.

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Just like a stock, it's the same thing. And they behave the same way. Sometimes a bid ask spread is really, really tight.

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I'll show you one that's really tight. Then sometimes it's just a wide open spread, a huge spread.

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One last thing. Oh, in regards, you might have noticed that I use a term that is actually antiquated sometimes.

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Around locked. 100 shares. Now we don't say that much at all ever anymore with stocks.

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Because you can buy 100 shares, 12 shares, 215 shares. You can even buy fractions of shares nowadays.

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But back in the day, an odd lot, you buy not 100 but something else, or a multiple of 100.

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You actually paid an extra fee for that, for an odd lot. Which was just the way it was.

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There was kind of a scam that went on for years and years. Buy your kid a share of stock.

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Well, when you did that, you would pay ridiculously more than the market price for that share. Why?

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Because you were being sold an odd lot of the stock. Fortunately, now that's gone. That doesn't happen anymore.

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However, in bonds, it's still a thing. They call it a full lot. And you'll see it.

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A full lot. You can buy it, but you don't pay the same as if you buy an odd lot.

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But you don't pay the same as if you bought a full lot. In fact, some bonds, you can't buy an odd lot.

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You'll see that in some of these quotes that I've got. Where you just can't do it. I can't buy.

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Well, I'd like to buy three of those bonds. No, you're not. We don't do it that way.

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The reason is simple. Most bonds are a big, big dog playing tool. They're not for the typical investor.

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If you want to buy bonds and you're a normal investor, you buy a mutual fund that's got a pile of bonds in it.

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Or an ETF or an ETN that's got a bunch of bonds in it. You don't buy bonds straight up. Normally.

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That's why we don't even see quotes of them. It used to be I could pull up quote sheets of bonds just like stocks.

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You can't do it anymore. There's just no place that shows them.

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Well, here's a bunch of different bonds and their prices and yields and all that. Just ain't there anymore.

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And it's because only the big, big institutional investors play in the bond market.

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Trust funds, mutual funds, institutional investors of all kinds. So there you are.

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Now one last term. Yield.

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The coupon is what the company is paying in interest every year on $1,000.

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80% the company is paying $80 a year. The yield is what the market thinks it should pay.

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Now the yield and the coupon should be exactly the same at settlement. In other words, we've worked it out.

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You, sir, you borrowed $100 million from me. We agreed for 30 years I will pay you 8%. That's the agreement.

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However, what happens down the road if your company starts to get in trouble?

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Well, you should be paying me more than 8% because I'm taking a big risk now.

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Well, what happens if interest rates fall? And I mean, interest rates for a bond at the risk level of mine are now going off at 6.5%.

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So the yield is right now what the market says that bond should pay. Not what it is paying, what it should pay.

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Now it could be higher than the coupon or it could be lower. Let's say that the market says, okay, right now you should be paying me 10%, but you're paying me only 8%.

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Well, there's going to be a sell-off of those bonds. As they sell, the price goes down, that makes the yield go up.

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Well, the other hand, what happens if the market says you're paying 8%, you've gotten a lot better, you're a lot safer, and interest rates are lower?

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You should be paying us only 6.5%. Well, if you have to pay 8%, every investor is going to run and buy your bonds because they're paying candy.

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And as they buy them, the price will go up and the yield will go down.

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So in other words, the yield is telling the story of the company's risk, its debt risk, based upon the price.

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The price is how we signal the risk. Markets work on prices, supply and demand, price goes up, all of that.

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But what it's really doing is it is moving the yield around to inform us of what the market thinks about the risk of the company.

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I'll show you what I mean in just a minute here. The Excel sheet, one of the great things about using Excel is that you can play around with the yield,

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move it above the bond, move it above the coupon, move it below the coupon, and you'll see what happens to the price.

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You can move the price around, make the bond sell at a premium to par, in other words, above 1,000.

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Watch what happens to the yield. Make the price at a discount to par, below 1,000. You'll see what happens to the yield.

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And it's all, you'll see it in Excel. I've made it so that you can just play around with different yields and different prices and see the results of it.

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Now before I pull up the sheet, let me show you some actual bond quotes. I had to do these one by one until the site I was using said,

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no, you can't have any more until you pay us. So I got a couple off here though. Okay, let's look at, let's start with Netflix, NFLX.

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You notice that it's selling at a premium to par. Netflix is, now by the way, bonds actually don't use the stock symbol.

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They use this long chain of letters and numbers to identify one. It's just maddening. I was glad I saw this so I didn't have to deal with those actual trading symbols of bonds.

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Netflix, this is a bond. Its coupon is 5.38%. They still do it in eighths behind the curtain and then it turns it into decimals for us normal people.

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But it's paying 5.375%. This bond is due in 2029. Now that, we don't, yes that's five years and five months, is it something like that?

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No, don't do that. Just say five or six. I mean, your numbers will be a little off from what you would see in these actual automated quotes.

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But, you know, come on, it gets ridiculous. This would be a term of five years. Or if you said, well, rounded, that's six years, whatever.

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Okay, now, notice the bid and the ask. You see them? You notice that they're selling at a premium to par.

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Now over here, this blank space, this would be if you could trade odd lots. If it's not there, you can't.

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You're going to buy a full lot or you're just going to go pound salt. Okay, now notice, I brought this term up before.

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There's something called the mark. The mark is the midway point between the bid and the ask. And oftentimes a quote should be at the mark.

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So in other words, you could have 58 on the bid and say the ask was 60, so the mark would be the midpoint, 59.

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Oftentimes you'll hear me say on the mark. That's just the middle point of the bid and the ask.

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Now you'll see with this net, look at Netflix here. The bid and the ask are actually pretty widely separated.

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If you wanted to sell a Netflix bond that you were holding, you would get $1,010.09.

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If you wanted to buy a Netflix bond, you would pay $1,015.64.

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So you see the bid ask spread there. And of course, the prices drive the yields, so there's a yield on the bid and there's a yield on the ask.

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Let's look at another one. Tesla. Now this one's an odd bird because the bid and the ask are the same.

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That would mean that there's a lot of trading going on in it. This is a Tesla 5.3%.

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So in other words, if you bought a $1,000 Tesla bond, you get a $53 check every year.

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You'd probably get a $26.50 check every six months. It's the way it would really work.

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And the term of this bond is one year. Yes, technically it's 1.3 or something like that years.

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Don't kill yourself. I don't, you don't either. It's a one year to maturity.

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And notice that it's selling at a premium to par on the mark. Well, the mark is the bid and the ask, $102.68.

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So it's selling above $1,000. That would mean that the market says this coupon is higher than we need.

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Sure enough, see the yield, 4.534 against the coupon at 5.3. So in other words, this bond pays a coupon higher

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than the market says it needs to. So people buy the bond, drive up the price, which drives down the yield

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to where the market thinks it should be.

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Now, one last one I'll show you before I go to the Excel sheets and show you that this isn't too painful is

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if a bond sucks, the company is in trouble. The bondholders are worried about the company making its coupon payments.

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Paying off the maturity value of the bond, all that kind of stuff. Well, obviously, investors are going to sell the hell out of the bond.

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That's going to drive the price down and therefore drive the yield up. If a bond goes down, I mean, if the quote goes to 95 to 94,

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the yield is going to be way above the coupon. We informally call those junk bonds. Junk. More formally, we call them high-yield bonds.

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Of course, they have a high yield because they have a low price. Let's look at this interesting one, AMZN.

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First of all, notice the term of that bond is 33 years. That's a long bond. Look at the bid and the ask. Good heavens.

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82.26 on the bid, 88.26 on the ask. Those are way below par. And so, of course, you see the yields going way above the coupon on those.

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That bid ask spread is wide, which means there's not a lot of activity in the bond. The mark is way below. What is the mark? About 84? No.

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85. The mark is about 85. That's way below par. This AMZ, in other words, the market is saying, 4.25 percent? Are you nuts?

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This thing should be paying closer to 5.1 percent. So they're punishing the bond, beating its price down, which drives the yield up. That's all there is to it.

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Now, I wouldn't worry too much about getting every detail on my first pass, but you can look at some. As a matter of fact, let me look at one that's a little bit better behaved, the Netflix bond.

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You can see some of the information about it. The years to maturity, 5.663 years. There's no worse because it's not a callable. So there's just one term to maturity.

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The par is 100 on the 100. The coupon, 5.375. It's a fixed coupon. In other words, it's not one of those weird variable coupons.

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In the annual, whatever. They're paid semi-annually. Like I said, most actually are paid. Every half of the coupon you get a check for every six months.

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And this is senior unsecured, which means that it is a debenture. Remember the difference between a debenture and a mortgage bond?

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This is a debenture. It's not secured by any assets at all. Just by the general credit of the company.

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And that's about, and I mean there's the actual trading symbol, that mess right there. That's why I don't use them.

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It's a domestic bond. Its currency is US dollars. And they issued, good grief, 900 million of those? Whoa.

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That was that monster issue they did, I was telling you about a few years back. It was considered junk at the time.

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And there you go. Well, yeah, you can buy a fixed lot. Let me look at something. Yeah, you can buy a fixed lot of these. 2000 of them at a time.

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And then after that, a thousand more. You can buy 2000, 3000, 4000, 5000. That's what that means. Don't worry too much about that.

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All that information there, I've already talked about the parts that's important for us.

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Goodness, that was an interesting, let me look back at something here. Give me a second.

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None of those offer, see sometimes there's a panel over here that has, if you want to buy an odd lot,

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what's the bid and ask and all that would be for odd lots of them. But not one of those three that I grabbed before it stopped me from getting quotes had that panel over there.

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So anyway, these are actual real world, real life quotes.

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Now, what do we do if we are doing this for homework, a quiz or a test?

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You go into Canvas and you go to your files folder.

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And you go to Spreadsheets. Right there it is. The very top one, Bond Calculations Enhanced.

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Now it's enhanced because I made it look pretty. Go over to the three vertical dots and download.

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And you will see, on one side if you know the yield, you can calculate the price. On the other side, if you know the price, you can calculate the yield.

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And I've made kind of a nice attractive peach color, what you don't touch.

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And the white is what you would put in the numbers from a problem. And the pale blue is the result, the answer that you want.

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That's all there is to this. You just have to make sure that you put in things the right way.

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So I've got a problem down here. JCG 6.225 2035 currently has a yield of 5.75%. What is the price?

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So that's where you use the sheet on the left, the panel on the left, Calculate Bond Price.

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Now the annual coupon, you just put in what you see the problem give you, 6.225%.

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You give the yield to maturity, 5.75%.

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Now you give the years to maturity. Now in this case I put in, the sheet will open with 10, but this is actually 11 because we're in 2024.

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So 2035 minus 2024 is 11 years. And we'll make it so that the coupons are realistic, they're twice a year.

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And there's your price, $1,038.33. That's all there is to it.

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Now a couple of things let me show you before we go on. Remember that with that bond, you're going to pay me a coupon every year or every six months.

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You will do that until the year of maturity. At that time you'll pay me one last coupon and you'll give me back my $1,000.

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Okay, that's nice. So what happens if I make, get us closer and closer to the year of maturity?

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At 11 years the price was $1,038. How about 8 years? It's $1,030.

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How about 5 years? It's $1,020. How about 3 years? It's $1,013.

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What about 1 year? You see as you're getting closer, yes?

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Just to make it real, I can put one. It doesn't matter. Yes, I will tell you.

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But I'll tell you also that I will give enough range. Making it one or two is not going to really change the answer very much at all for normal bonds.

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I mean I'll put it for a range where you could make a mistake and put one instead of two or two instead of one. You'll get it right.

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Now, what do you see happening to the price of the bond as you come, as the term approaches zero? What happens to the price of the bond?

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It approaches par. Because when there's no time left, you're going to get your $1,000 back. Do you see it?

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Now let me take it back up here to 11 years and let's do something else. Do you see that when the market wanted a rate lower than what the company was actually paying,

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you get the bond sells at a premium to par? The market says, in my problem here, the market's saying you need to pay us 5.75%.

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Oh, you're paying us 6.225%? Well, we're going to buy the hell out of that bond. It sells at a premium.

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What happens if the market had said, we really would like to have you paying us 6.5%, but you're paying only 6.225%?

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It sells at a discount to par. You can move these around and you can see it for yourself. If the yield is below the coupon, the bond sells at a premium.

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If the yield is above the coupon, the bond sells at a discount to par. You can try it yourself. Try different yields and you'll see whether it's a premium or a discount.

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Let me take you over here to this side. We've got CGY 8.20% 2035 is currently priced at $942.35. What is the yield to maturity?

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Now, this is the side where everything Excel wants on the $100. So you just have to remember that. Up here, you're going to want to give it the term.

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You don't tell it the settlement date. When you open Excel, it's going to put now the date today, whatever it is today.

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And the maturity will just be the term added onto the settlement. So when I put in the 11 here, it will automatically adjust the maturity.

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All you need to do is get the term. That's all you need to do. How many years between now and when it finishes up?

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You need to give it the coupon. In this case, the coupon was 8.2%. It will automatically adjust it to three decimal places.

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The redemption, that's the face value. Excel uses the term redemption. But that's just their term.

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Now remember that it's on the $100. For God's sake, don't put in thousands.

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Now, frequency, you can put a 2 if you want semi-annual, 1 if you want annual coupons. Now the price is on the $100. So I would say equals 942.25 divided by $100.

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Divided by 10, did it. I do it that way because I'm, for some reason, moving that decimal place, one gets me sometimes.

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And there's your yield at the bottom. Just like that. It's that simple to do it.

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Now as long as you don't cross into the orange or the blue, you should be able to put anything that I would ask you about.

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I will, on a test, I'll ask for a yield if you have the price. I'll ask for a price if you have the yield.

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As long as you know how to do this, this is the power of Excel, is once you have set up the sheet, all you have to do is put in numbers that could change for the given situation.

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And you don't have to rewrite formulas or anything because the formulas don't use any numbers. They use references.

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See this yield here? There isn't one number in it. It's all just references to the numbers that you put in elsewhere.

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Which makes your life quite a bit easier on these.

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Now, let me go back here and I'm going to pull up one of these sheets. Now, I caution that you'll get answers that are slightly different in the Excel sheet from what the quotation services are posting at any given moment.

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It's nothing major, but let me do one like here. Suppose that I know the price of NFLX and I want to find the yield.

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Well, let me go over here. This is a 5.375 coupon. So that would be 5.375.

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Now, if I look over here, it's due in five years. Technically, five point something. But I'm not going to quibble with anyone about that.

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So let's say the term is five years. Going on down, let's see what the price. I'm using the bid.

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The price right now is 101.009. So I would have 101.009.

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We'll make the coupons semi-annual too, to make it what really would happen.

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So my calculation from the Excel sheet, it won't be exactly the same, but a lot of that has to do with the term, the fraction of a year.

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Let's see if I'm pretty close. 5.165, 5.14, yeah, it's about it. It's about it.

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I don't know. I set this up so that it would be easy to use. Let me see what would happen if I went 5.5 years.

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Probably this sheet can't do it right. Yeah, it'll just keep what was, it'll round it back to five or something like that.

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Yeah, there you go. Like I said, the sheet will give you slightly different answers than the quotation service as well.

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But basically they're doing the same thing except in real time. They do a version like an Excel.

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They get the prices because that's how everything is done. And then from those they get the implied yields right there.

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Let me do the 101.564. 5.02, the quote, 5.05. Yeah, it's off by three basis points. Not too bad though.

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So there you go. That's how it's done. And that's how they're doing it too except they're using real time quotations.

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And I'm using a static Excel sheet. But this is how the whole thing is done.

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And so when you go to, may remember, you're going to go files, bond calculation, enhanced, download it.

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This will be enough that you can do price if you know the yield on the left panel, yield if you know the price on the right panel.

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And that would be enough for that kind of thing. You know, I don't do the clean and dirty in an Excel sheet, but that's not too bad to do.

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But this is the one that used to be the killer. It took me one and a half or two lectures to get through price and yield back in the day.

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But with Excel, it's just a breeze to do these. And that's why Excel is so important for you to learn so that you can do these heavy liftings

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without having to worry about calculators or formulas or tables like you we did like you're even doing some classes still to this day.

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Last thing.

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Get rid of this here. What? No.

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Tesla. Let me try Tesla. There's something weird about this one. That data just looks too clean.

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Something about it is really odd. I'm going to do.

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What is this? This has one year left.

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102.68.

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Has a term of one year and some change.

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And the coupon is 5.3%.

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Let me see what it says. That can't be something is weird about that bond.

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Now the Excel sheet is saying that the yield is 2.57%.

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That's way away from the yield. Something is really odd about that.

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Even if I put in there like 1.3 years.

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No. There's something really odd about that stock or that bond.

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Its price is way at a premium to par. Even though it has only a year left, it should be getting close to par by now.

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Why is it still so far above par? That's just not making any sense.

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Unless there's something I'm missing here. It's a fixed coupon. Semi-annual. Unsecured.

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I can't see it. Years to maturity 1.408. That's not going to do anything. 1.408.

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I don't think this Excel sheet can do that anyway though. No. I didn't make it to do that.

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There's just something very strange about that stock.

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But anyway, that is how you do Excel like an expert.

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It will make you look like a hero at your next bond, price, and yield party.

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That's all I have for you today. I thank you.