The Bond Price Yield report allows users to run sensitivity analysis on the valuation of loans. Users can target specific rates of return and prices. The table will present the chosen criteria under all existing scenarios in the deal.
User Definitions
# of Steps:
The user can define how many steps will be calculated in the table. If the chosen value is 40 with 5 steps, for example, the table will show the chosen value in one step and will also calculate two steps above 40 and two steps below 40.
Step Size:
The user can define the size of the steps. If the user will choose that each step is 10 with the price of $4,000, the table will show the following steps:
The same will apply for yield. For example, yield of 9.57, 5 steps, and step size 2.
The user can choose to define up to 50 steps.
Modes
Price to Yield:
The user can calculate the yield for a given price.
Yield to Price:
The user can calculate the price for a given yield.
Additional Fields
Weighted Average Life (WAL):
The user can see how many years it will take to get the principal back under each Scenario Principal window. This is the window of time in which the user can expect to get the principal back, in periods.
Calculation: (Dollar Principal*month) / 12 - number of months in order to get the principal back