Things You'll Need:
- calculator
- information about the bond in question
-
Step 1
First, you will need to know these pieces of information about the bond:
- what day count does it use to calculate interest (some bonds use actual/actual, some use 30/360 or 30/365, for example - we'll assume 30/360)
- how frequently the bond pays interest (in this case we'll assume semiannually, as that is fairly common)
- the bond's interest rate (we'll assume 5% for this example)
- the quantity you hold (we'll assume 100,000 bonds for this example) -
Step 2
So, let's assume we hold 100,000 bonds, paying %5 per year, calculating interest using the 30/360 method (30 days per month, 360 days per year), and interest is paid every 6 months.
-
Step 3
You take the Quantity of the bond and multiply it by the interest rate:
100,000 x 5% = $5,000. This is the YEARLY interest we will receive on this bond. -
Step 4
To calculate the interest you would receive for half the year, you'd divide that number by 2: 5000/2 = $2,500.
-
Step 5
What if you want to know how much interest this bond will pay PER DAY? Then you'd take the 5000 and divide by 360, because we are using the 30/360 day count. If you were using 30/365, you'd divide by 365 instead. 5000/360 = $13.888888 per day. Multiply that by the # of days you're calculating interest for, and there's your answer!
