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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

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Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Discounting Cash Flow Exercises

Discounting Cash Flow Exercises

Lindsey Matthews

30 years: Risk management & derivatives trading

In this video, Lindsey will run through 4 questions related to the topics he has discussed in the fixed income unlocked series.

In this video, Lindsey will run through 4 questions related to the topics he has discussed in the fixed income unlocked series.

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Discounting Cash Flow Exercises

8 mins 47 secs

Key learning objectives:

  • Identify the formula used to discount future cash flows

  • Applications of the formula

Overview:

This video is a series of questions to test your knowledge on PV calculations.

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Summary

How do we discount future cash flows, at the current yield?

Present value formula outlined below:

PV = CF1/(1+y) + CF2/(1+y)2 + CF3/(1+y)3 + ... + CFn/(1+y)n

What amount would we need to invest today, at the current yield, in order to generate that cashflow at that point in the future?

Question 1: A zero coupon bond pays 100 in 1 year. At a yield of 3% for the year, what is the price today?

Hint: you just need the first term of the formula - PV = CF1/(1+y)

Question 2: A 2 year bond pays a coupon 4, annually, and 100 at maturity. It is trading at a yield of 3%, what is its price?

Hint: use the first two terms of the formula : PV = CF1/(1+y) + CF2/(1+y)2

Question 3: Estimate what you think a 4 year bond, paying a 4% coupon, priced at 3% yield is worth.

Hint: 1 every year for 4 years, discounted.

Use the following formula: PV = CF1/(1+y) + CF2/(1+y)2 + CF3/(1+y)3 + CF4/(1+y)4

Question 4: A bond pays a coupon of 4% semi-annually - assume 2 every half year. And it is priced at a yield of 3% - or 1.5% for every half year. What is the value of the bond discounted at this yield?

Hint:
Year Cashflow Discount Factor PV
0.5
1
1.5
2
2.5
3
3.5
4
 

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Lindsey Matthews

Lindsey Matthews

Lindsey runs Perfordiant, an investment risk and performance consulting firm. He has worked in financial markets since 1992. Lindsey became an MD in fixed income and equities, ran a Risk function, and was on the management team of an Asset Management fintech business. Lindsey is now a Visiting Fellow at the Henley Business School, and resides on the board of CFA UK.

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