ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Credit Videos 265 videos
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
What does “Breaking the Buck” mean? Breaking the buck means that a money market fund’s value has dropped to less than $1. This happens becaus...
What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...
Finance: What is Bond Amortization? 7 Views
Share It!
Description:
What is Bond Amortization? Bond amortization is simply the spreading out of the cost of the bond over time. Bonds have amortization schedules and these lay out how the bond is paid including principal and what is owed in interest.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Accounting
- Terms and Concepts / Bonds
- Terms and Concepts / Company Valuation
- Terms and Concepts / Credit
- Terms and Concepts / Derivatives
- Terms and Concepts / Education
- Terms and Concepts / Investing
- Terms and Concepts / Mortgage
- Terms and Concepts / Muni Bonds
- Terms and Concepts / Regulations
- Terms and Concepts / Tax
Transcript
- 00:00
Finance a la shmoop what is bond amortization? okay fancy term easy
- 00:08
concept the basic idea is that you have to "revalue" what a bond is
- 00:14
actually worth each period which usually means twice a year because bonds pay [Monthly calendar appears]
- 00:18
interest on the you know semester system yeah twice a year so let's say you've
- 00:22
paid seven hundred bucks for a bond with a 5% coupon which comes due for a
Full Transcript
- 00:26
thousand bucks in ten years over that time you'll have received two things the
- 00:31
5% per year interest from the bond in cash paid along the way and the [5% interest per year appears]
- 00:35
appreciation of the 700 bucks to become the thousand dollar par value at which
- 00:41
point it will eventually pay back its principal so to amortize the $300 of
- 00:46
appreciation of that bond over ten years while you could attribute 30 bucks a
- 00:51
year in appreciation each year such that after we'll say three and a half years
- 00:56
you'd hold the bond as having appreciated 3.5 times 30 bucks or $105 [Straight line appreciation formula appears]
- 01:04
in appreciation making the bond worth at that point in time eight hundred five
- 01:09
dollars oh yeah fancy but also pretty easy
Related Videos
GED Social Studies 1.1 Civics and Government
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...