Corporate Bond Calculator
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A corporate bond calculator is a very important tool to calculate the value of corporate bonds. The current yield, parity price of stock, conversion ratio, coupon interest rates, and accrued interest amounts are the most used calculations by investors and analysts as it enables them to assess corporate bonds.[br]
Corporate Bond Calculator: Important Calculations
Important calculations carried out by a corporate bond calculator are:
Current Yield: The current yield is calculated with a corporate bond calculator to assess the income that a bond would generate for a particular year. This is calculated by dividing the annual interest payment by the bond’s current price. So, if the coupon rate of the bond is $50 and the current price of the bond is $1000, then the current yield will be 5%.
Conversion Ratio: In convertible debentures, the conversion ratio is used to calculate the number of shares to convert corporate bonds into common stock. The conversion ratio of the corporate bond can be assessed by taking par value of a bond divided by the conversion price. Suppose the par value of the bond is $1000 and the conversion price is $10, the conversion ratio will be $20 shares per bond.
Accrued Interest Amount: The parity price of a stock can be assessed by a corporate bond calculator by taking the market value of bond and dividing it by the conversion ratio. For example, if the market value of a bond is $1500 and the conversion ratio of 20, the parity price of the stock will be $75.[br]
Accrued Interest Amount: This is used to find out the amount of the earned interest accrued from the last interest payment. It is calculated by multiplying the principal by the interest rate and then multiplying by the days of interest divided by 360. Suppose the principal amount is $20,000 with 10% interest rate for 95 days, the accrued interest amount is $527.
Coupon Interest Rate: This is the stated interest rate of the bond. With a corporate bond calculator, calculate the coupon interest rate by taking the coupon payment divided by the par value of the bond. So, if the coupon payment is $115 and the par value is $1000, then the coupon rate/coupon interest rate will be 12%.
Many online providers offer corporate bond calculators at reasonable prices. Still, invest some effort to understand about the terms and variables associated with corporate bond calculations.