Bond Valuation YTM Yield to Maturity (Hindi) - CA Final AFM | CMA Final SFM

For English Version: • Bond Valuation - Yield...
We simplify your financial learnings.
►►CA Final AFM Courses: www.sfmguru.co...
►►CMA Final SFM Courses:
www.sfmguru.co...
►►CFA Level 1:
www.sfmguru.co...
►►Subscribe here to learn more of Strategic Financial Management: goo.gl/HTY5SN
►►Read more on our website: www.sfmguru.co...
Yield to Maturity
This is a rate of return which is generated by a bond over a period up to its maturity. If the future cash flows of interest and redemption price are discounted using YTM, the present value of such cash flows will be equal to its actual market price. In other words, a rate of discounting which can make the intrinsic value equal to the actual market price can be considered as YTM Rate.
For example, if a bond is issued at par with face value of ` 1,000 and redeemable at par with coupon rate of 10% per annum is actually providing the yield of 10% per annum. In other words, the YTM of such bond shall be 10% per annum.
However, in the same example if the bond is redeemable at premium, other things remaining same, it would obviously provide an yield higher than 10%.
Annuity Bonds
These bonds are paid over a period of time by the same amount of cash flows each year. Therefore, there is neither any coupon payment nor any redemption price. All the cash flows of these bonds are spread over their life by way of annuities.
These are bonds which would repay the principal over its life along with interest by way of constant cash flows. For example, a bond that is issued at ` 1,000 with 5 years life provides an annuity of ` 260 per annum at end of each year over its life of 5 years.
The total cash flows over 5 years will be (` 260 x 5) = ` 1,300
This includes the principal repayment of ` 1,000 and the total interest of ` 300.
Changes in Intrinsic Value of Bond as it approaches its Maturity
(Inter-relationship between Intrinsic value and Redeemable Value)
The intrinsic value of the bond gets closer to the redemption price as and when the bond approaches its maturity. If a Premium Bond is redeemable at par, its intrinsic value constantly declines over time. If a Discount Bond is redeemable at par, its intrinsic value constantly rises over time.
Zero Coupon Bonds (ZCB)
These are bonds which do not provide any coupon payments. In other words, there is no interest payable on such bonds. These bonds are either issued at nominal discount or at par and redeemable at a significant premium. The present value of cash flows from this bond considers only the present value of redemption price which is its intrinsic value. With maturity date coming closer the intrinsic value of such bonds increases.
Deep Discount Bonds (DDB)
These are such zero coupon bonds, which are redeemable at par but issued at significant discount.
Callable Bonds
A callable bond is such a bond that provides an option to the issuer to call for redemption at an earlier date as compared to maturity. Such bonds are generally redeemed before maturity if the interest rate in the market declines. Inversely if the interest rate increases the issuer will opt for redemption of the bonds at the specified maturity date only. The call date is a specified date at which the issuer can call for premature redemption. The call price of a bond generally is higher than the redemption price payable on maturity, in order to compensate the investor.
Yield to Call (YTC)
YTC is applicable only for callable bonds. YTC is determined just like YTM. The only difference is, while determining YTC the applicable date of redemption will be the call date and not maturity date and the redemption value applicable at the call date shall be considered in place of redemption at maturity.
#Bonds , #Finance , #CAFinal , #FinancialLearning , #CAFinalSFM , #StrategicFinancialManagement , #SFM , #YTM , #YieldtoMaturity

[@NikhilJobanputra]

For English Version: kzbin.info/www/bejne/d3qQe6ahja2VmNk

[@rishibx]

Rare to come across someone who explains logic behind formulas so well. Thank you very much. This logic will stay with me for years to come.

[@ShaikSafia123456]

You made my concepts crystal clear. Thank you so much sir. What an awesome lecture 🙏

[@rushmerashmee]

Superb explanation Sir. All this time I was just using Formula without even knowing its core. But now I could understand that this all was so easy. You really make anything so simplified. Thanks a lot Sir.

[@neharawat2645]

Can you explain me ... About table

[@neharawat2645]

How is make

[@devchandak7435]

Loved the way you made us understand, never going to forget it

[@davidkunwar6795]

Sir, the way you explained the formula is fascinating. Keep up the good work :)

[@PiyushKumar-ze5zp]

So nice explanation of irr... Bond valuation made easy. Thank you sir

[@IshitaIyer11]

Thanks for explaining the Concept explained in the most simplistic way... 🙏🏻

[@anandmishra4109]

you are great sir! no one will that complex formula after going through your simple method. Jai ho gurudev ki

[@suraiyaritu2333]

Thank you so much sir! I haven't gotten a single tuition Because I learn it on KZbin. And Your video is very useful.❤️

[@heroasik5423]

V=I*(1-1/(1+ytm)^n)/ytm+M/(1+ytm)^n Let 1+ytm=x Then make little simplification as V*x^(n+1)-(I+V)*x^n-M*x+I+M=0 And let above as f(x)=0 And find the derivative of f(x) And then use Newton Raphson method formula as x(i+1)=x(i)-f(x(i))/f'(x(i)) with initial guess as x=2

[@insighfulmanagers]

Very nice explanation sir!! Statistical Interpolation was never considered this much simple !!

[@binodmazumdar2880]

Incredible teaching Sir....💓💓💓 Paying my utmost venerance to you

[@geetaupadhyaya4114]

The best video for YTM of bonds, thabk thank you so much Sir🙏

[@hymavathit7192]

very clear lecture sir. Thank you verymuch

[@k.sivaperumal7561]

How to get PV FACTOR VALUE FROM TABLE? HOW TO I CHECK?

[@boogiewitdahoodie364]

You can search online

[@Imrankhan088]

Explained in a very simple manner. Thanks.

[@meghnakotian7514]

Thank You. Nice explanation Explained in a logical way

[@VikramKumar-cm2vs]

Don't talk in Hindi kind request. This video must be surely watched by foreigners too. So good your theory of explanations are and not sleepy or boring and is better than US, UK counterparts. Sadly i don't understand hindi more that's the primary least reason here. But as i said foreigners must watch all your videos.

[@NikhilJobanputra]

Dear Vikram, Thank you for the appreciation. I have always uploaded videos in both Hindi and English for my viewers. For English Version: kzbin.info/www/bejne/d3qQe6ahja2VmNk

[@majid9943]

No doubt an excellent teacher .....subscribe tou banta hai

[@sidout-tf1oy]

Thank you for your efforts. Very well explained

[@grreshmakoti7709]

Sir will you provide videos for swap options futures forwards

[@ramanparajuli6826]

Well simplified of complexity of this concept Adorable explanation sir You are among my best teachers Lots of love from your Nepalese student

[@morningstar5945]

Sir if we put back the value of r as 10.67 in =ns 1/(1+r)*4×1536 the pv pops out as 1023 which doesn't match the current market price of the bond ie 1050.? Is the difference of 1050-1023=27due to appromaxation?

[@rps7564]

How to get PV factor?

[@deskdeveloper2061]

PV = CF/(1+r)^n. In this case for 4 years , PV= 80[ 1/(1.1)^4 + 1/(1.1)^3 +1/(1.1)^2 + 1/(1.1)^1] PV factor = 1/(1.1)^4 + 1/(1.1)^3 +1/(1.1)^2 + 1/(1.1)^1 = 3.169

[@Sol365-N]

@@deskdeveloper2061 great of you for replying to one hear old comments ✌️✌️

[@abulkalamsamsuddin6438]

Excellent presentation!

[@Moymyu]

Sir how to estimate a discounting factor in trial and error of not give discounting rate

[@deepasharma3897]

Thank you sooo much sir for explaining in such simplifying manner.

[@foziamehtab2063]

Always best explanation.. Thanks so much for uploading ur videos sir.. Please keep up with the great work🙏

[@antinational5579]

So the bond will be at Par if the future value matches the market value?

[@amnamukhtar8144]

This video is very Helpful.for me Thanks sir😃

[@ashutoshtiwari8088]

How?! If we are getting bons at premium today, how can our ytm be higher it must be low!

[@ishikasaxena1630]

Superb explanation sir.. 😍 It Was of great help👍

[@NikhilJobanputra]

Glad to hear that

[@deepmajumdar1832]

Great lecture sir...please make a video on credit default swaps valuation

[@NikhilJobanputra]

Dear Deep, Thanks for your feedback...!! Video on "Credit Derivatives and Credit Default Swaps" Coming soon...

[@ramu992]

You are a god sir, thanks a lot... You've contributed to my success..

[@anjuahlawat3055]

Sir I get confused every time, thank you so much sir

[@heroasik5423]

Sir using Newton Raphson method we can calculate exact value of ytm I am a mechanical engineering student

[@grreshmakoti7709]

Thanku sir yur vid helped me a lot for caiib please post some more videos

[@salushkaramdinee6209]

how did he get the 3.1669 ?

[@rohansharma6186]

what is the difference between face value and redemption value

[@reshmilatasingh9942]

PV factors kaise calculate kr rahe hain

[@greatdani100]

this is really helpful lecture but i didnt understand pv factor how can we calculate pv?

[@Tvamshikrishna]

Same

[@dhiyakim9022]

Please provide subtitles thankyou

[@jerrythelaugh]

can anyone explain how pv & pv of cashflow is calculated here!!!

[@anjanashelar4867]

Thanks sir.. very much awaited explanation..

[@shivangiverma101]

When to take PV of Annuity formula.when to take PV=CF/(1+r)n

[@KA-oi4yf]

AMAZING EXPLANATION 👏

[@harshachowdhary6321]

Pv factor how to find

[@timepasstv850]

Very nice explanation..

[@ansulanandchouksey7001]

how to calculate PV factor?

[@urvashiseth2128]

How the value 3.1699 came?

[@priyasingh4366]

Yar interest me to pvaf wali table lagegi na

[@mithleshsyal7317]

Sir, using PVF formula, i.e. 1/(1+r) & then multiply by 4, I am unable to get same PVF of cash flows as yours. My answer @10% is 0.909*4=3.636. My PVF answer for redemption value is correct.Please guide me.

[@NikhilJobanputra]

You are not using the correct formula. Please use the formula for "Present Value of Annuity"

[@mohdozair3658]

Dude we should not directly multiply it by 4, we have to multiply it in this manner i.e. 1/1.1+1/1.1+1/1.1+1/1.1=3.169

[@lokeshn8850]

@CA Nikhil Jobanputra hello sir, in practice manual to calculate ytm, sometimes they use irr, sometimes they use (coupon+pro rated discount) /(average of purchase price and redemption price) I am very confused when to use irr and when to use formula to find ytm. Is it better to just always calculate irr? Please explain.

[@NikhilJobanputra]

IRR approach is the best as covered in my Video as well.

[@namratamishra5667]

Superb explanation Sir.

[@vikramraghuwanshi9455]

Superb explanitons.

[@NikhilJobanputra]

Glad it was helpful!

[@antinational5579]

Where do you got the PV factor from?

[@naturaldisney5732]

The same is my question

[@antinational5579]

@@naturaldisney5732 these types of video always end up giving half knowledge and such type of knowledge is very dangerous

[@arinjain25]

​@@antinational5579Had you watched any another video with clear explanation ,plz tell me , tomorrow I have my exam

[@chetanpanwar1762]

Cash inflows happened 4 times of 80 per year and sir you took pv of single year...why

[@NikhilJobanputra]

Dear Chetan, Please watch the video again. It is not single year PV that I have taken, it is the "Annuity Factor"

[@prashantedu7039]

how did you found PVF

[@sachanamit3234]

Dear sir how do you find PV factor at different YTM???

[@parmaladevi6981]

Sir why cant we put here simple excel formula of RATE in excel

[@NikhilJobanputra]

Hello Dear, We cant put it because, in EXAMS no EXCEL will be provided.

[@abmershad9573]

Sir, how can i get 0.6830. What percentage should be taken? Is the year also remaining same as 4 year? Plz explain.

[@mohdozair3658]

1/1.1+1/1.1+1/1.1+1/1.1=3.169

[@apoorvtiwari3293]

Superb explanation sir thanks

[@AfshanTaranum-x5t]

3.1699 kaha se aya ye wala samjh nahi aya calculation karke b bataye na sir

[@arunkumar4u]

Ye value chart main milegi

[@mrswtmeat3277]

Anyone can clear my doubts how we get 3.1699 value in pv factor?

[@NikhilJobanputra]

It is the PV of annuity factor. You can refer the table of Annuity or simply use annuity factor formula.

[@mohdozair3658]

10%/100= 0.1 +1=1.1 then apply pv formula i.e. 1/1.1+1/1.1+1/1.1+1/1.1=3.169

[@k.sivaperumal7561]

@@NikhilJobanputra how to see table? How check?

[@k.sivaperumal7561]

@@NikhilJobanputra how to I refer table plz tell? Show table?

[@siddhidand]

@@mohdozair3658 answer does not come as 3.169

[@nalini.2023]

Thank you sir. I find your video is good. However, I'm unable to follow you. Thank you for considering my concern.

[@swatisingh163]

video is superb but How PV factor @10% is 3.1699 and 0.6830? If someone can help.

[@NikhilJobanputra]

Hi Swati, That is not the PV factor for 4th Year. It is a cumulative Annuity factor for years 1 to 4. It is obtained by taking the aggregate of PV factors of years 1 to 4.

[@swatisingh163]

@@NikhilJobanputra O thankyou Sir for ur reply

[@Aly.Hayder]

Sir you're great.

[@AnilKumar-jo6ug]

Sir, Can you tell while choosing Debt Mutual Funds, it is said that your investment time horizons to be matched with the Duration of the Debt Fund. Here Duration means what ? It is Average Maturity of Debt Fund, Macaulay Duration or Modified Duration ? What is the use of each of these three durations ? Kindly make a video as this topic is a bit confusing and currently Debt Market is not performing well. So, learning in this area is required. Usually SEBI also refers Macaulay Duration in Debt Fund duration, to compare with investment horizon. What I came to know recently is Macaulay Duration is apart from its definition (weighted average present cash flows of all bonds in debt fund) is nothing but equivalent time period of Zero Coupon Bond giving same profit. Refer url kzbin.info/www/bejne/nqrbiXmerr-ln9k of MithrilMoney.

[@pankajgarg6771]

Thanku so much sir

[@mahimaha8657]

Sir... Can u plss explain in English

[@rajanikumari6594]

How I will get 3.1699

[@mohdozair3658]

1/1.1+1/1.1+1/1.1+1/1.1=3.169

[@siddhidand]

@@mohdozair3658 please calculate again it comes as 3.63636

[@mansigarg9734]

Thanks alot

[@altamushhussain1963]

Amazing

[@basavarajbadiger9757]

Sir plz tell us in English language

[@nsx001]

Total boss.

[@nalini.2023]

Talk in English pls

[@NikhilJobanputra]

Hi Nalini, Thank you for the honest feedback. I totally understand your concern. I have to make videos in Hindi language to make this easily understandable for majority Indian students. However, I am in the process of making videos in complete English language henceforth. Please stay tuned to my channel. Warm regards...

[@lokeshn8850]

@@NikhilJobanputra hello sir, in practice manual to calculate ytm, sometimes they use irr, sometimes they use (coupon+pro rated discount) /(average of purchase price and redemption price) I am very confused when to use irr and when to use formula to find ytm. Is it better to just always calculate irr? Please explain.

[@reshmilatasingh9942]

Plz guide me sir

[@mugdha136]

Wow...

[@pankajsawant2640]

Wow

[@dheeraj3726]

Amazing