Fixed Income & Bond Valuation: Pricing, Yield Curves, Risks

Compare bonds with bank loans and with stock, highlighting lower borrowing costs, greater issuer freedom, tax advantages, potential eps dilution, and the role of leverage in financing.

Explore bond features: par value (face value), coupon rate, fixed-rate and zero-coupon bonds, issue price vs par, maturity, and claims on assets with call protection.

Explore bond features like put and call provisions and the indenture. Learn about bond ratings, credit risk, and types from zero coupon to inflation linked and floating rate.

Explore bond types from perpetual and zero coupon to plain vanilla, callable, putable, and convertible bonds, including euro, foreign, and global issues, and issuer credit quality.

Explore debentures, subordinated and mortgage bonds, and asset-backed securities, comparing unsecured and secured debt, plus factors for valuing bonds: book, liquidation, market, and intrinsic value through discounted cash flow.

Compute asset value by discounting expected cash flows at the investor’s required rate of return to obtain the present value, including bond coupons and par value.

Explore interest rate risk and how current yield differs from yield to maturity. See how par value, market price, and time to maturity drive premiums or discounts.

Explore how bond value responds to different interest rates and maturities, analyzing coupon versus required return, and compute bond payments and present value using a Microsoft bond example.

Master bond valuation by calculating present value using discount rates and coupons. Explore yield to maturity and current yield and observe price sensitivity through Excel formulas and examples.

Three key relationships govern bond valuation: price moves inversely with yield; market value falls below par when yield exceeds coupon; longer durations incur greater interest rate risk.

Explore clean versus dirty bond prices and compute accrued interest using day-count conventions, including 30 by 360 for municipal and corporate bonds and 182-day semiannual periods.

Compute bond prices via present value using a coupon rate, par value, and maturity; analyze effects of different required returns and payment frequencies.

Compare bond values to par, calculate current yield and yield to maturity, and distinguish zero-coupon pricing, illustrating with practical examples of when to sell and issue new bonds.

Explore how current yield and market discount rates affect the value of three semiannual-coupon bonds with par 1000 across 3, 7, and 20 years, showing bonds trade above or at par.

Analyze how coupon rate, par value, and maturity determine bond value under a given required return, guiding when to hold or sell based on premium or discount, with semiannual payments.

Compute yield to maturity and current yield for a five-year 5.5% coupon bond priced at 1076, and explain how adjusted current yield reflects price gains or losses.

Calculate bond values using dirty price and clean price for Microsoft, GE Capital, and Morgan Stanley bonds with 30, 10, and 5 year maturities at specified required returns.

Compute the expected rate of return on bonds from coupon, par value, and market value, using Microsoft, Morgan Stanley, and G Capital as examples; explain how above-par values lower returns.

Analyze how bond values for GE Capital, Morgan Stanley, and Microsoft respond to changing rates, showing PV, coupon, and maturity effects and guiding sell or buy new issue decisions.

Discover how to use Bloomberg terminal to calculate current bond face, principal value, accrued interest, and net cash, including factor changes and commands like BXT, SXT, DS, and CSHF.

Compute yield to call for a semiannual callable bond using the call price, five-year call date, and 1100 price, then examine duration and convexity for interest-rate risk.

Analyze how the yield curve, including normal, flat, and inverted shapes, drives bond valuation, and how the spot rate curve and credit spreads refine pricing.

Explore duration as the time to receipt of a bond's cash flows and compare Macaulay, modified, effective, and key rate durations, including zero coupon and vanilla bonds' price risk.

Compute a bond's duration and modified duration, then estimate price changes from yield shifts, and calculate a bond price using coupon, face value, and yield to maturity.

Learn to value bonds by discounting coupon and par values to yield to maturity, compute duration and modified duration, and assess price changes with yield shifts using Excel.

Explore bond valuation through duration, modified duration, and convexity, and the price-yield relationship for different bonds. Understand tax consequences, such as after-tax yield comparisons between taxable and municipal bonds.

Explore the term structure of interest rates, including yield, time to maturity, yield to maturity, and the math of future and present value, plus graphing the yield curve.

Explain the interest rate as the rate of return on loans and bonds, and how interim payments and basis points shape yields.

Explore the concept of future value, from simple and compound interest, with principal, rates, and multiple cash flows, and learn to calculate fv using Excel's fv function.

Compute the present value of future cash flows by discounting at the appropriate rate, using the present value formula PV = FV_n /(1+i)^n and the Excel PV function.

Learn to determine the interest rate for a future cash flow and use the Excel rate function, illustrated with a five-year investment and a zero-coupon bond yielding 12.79%.

Analyze the term structure of interest rates, linking spot rates, time to maturity, and yields to maturity. Learn to compute present value and yield for zero-coupon and coupon bonds.

Compute the yield to maturity by equating the present value of a bond’s coupon payments and principal to its price, solving for the discount rate.

Demonstrates how the term structure of interest rates and spot rates price bonds, using zero-coupon examples to compute present values and yield to maturity as a time-weighted average.

Explore the holding, annualised, and forward rates of return in the December 31, 2004 term structure, using short- and long-rate data and the OnePlus formula.

Learn how to compute the annualized rate of return using the one-plus compounding formula, handling time-varying returns, spot and forward rates, and holding periods.

Compute the present value of a five-year cash flow under time-varying, upward-sloping interest rates. Use year-by-year discount factors from 5%, rising 0.5% annually, to yield $945.65.

Explore the yield curve as the graphical representation of interest rates by maturity, highlighting Treasury benchmarks, shapes (flat, normal, inverted, humped), and its use as an economic signal.

Explore historical yield curves from the treasury data, comparing short-term and long-term rates, noting a flat January 2007 and a normal forward curve in May 2002.

Examine the term structure of interest rates, contrasting a flat curve in January 2007 with minimal short and long rate differences against May 2002's normal upward slope.

Explore the term structure of interest rates, computing holding and forward rates, using 2004 data to illustrate forward-rate derivations, yield curves, and practical fixed-income applications.

Explore the term structure of interest rates by plotting time to maturity against yield to maturity. Use US Treasury data to illustrate upward, downward, and flat shapes through the 2000s.

Explain how real rate, expected inflation, and interest rate risk shape level and slope of the term structure, with real rates reflecting time preference and risk premia rising with maturity.

Examine the term structure of interest rates on 31 December 2004 and learn to compute annualised rates of return, holding rates of return, and forward rates using the OnePlus formula.

Define the forward rate of return as the interest rate starting in a year, and compute year-one-to-year-two and year-two-to-year-three forward rates from the 2004 term structure using the compounding formula.

Explore the term structure of interest rates with zero-coupon assumptions, calculating returns on three-month treasuries and two-year notes using annualized yields and simple interpolation for non-listed maturities.

Examine forward rates and holding period returns in fixed income, using 20-year treasuries and a 4.85% annualized rate to illustrate growth to December 2024 and corporate projects.

Real rate, expected inflation, and interest rate risk determine level and slope of the yield curve; the real rate sets level, while inflation and risk premiums shape the curve.

Explore fixed income securities, from bond basics and characteristics to pricing concepts, yields, duration, and the yield curve, with emphasis on issuer and investor roles.

Learn bond characteristics, including coupon (fixed or variable), face value, maturity, interest payment dates, and accrued interest, and distinguish plain vanilla bonds from index-linked variations.

Understand day count conventions, IP periods, and short periods, and classify bonds by issuer, including government and corporate, with coupon and redemption features, including fixed, floating, and zero coupon bonds.

Explore redemption-based bond types—callable, portable, and convertible with embedded options—and how fixed income provides steady income, capital protection, and lower risk.

Explore fixed income securities and the investor risks they face, including interest rate risk, inflation risk, and credit risk, and how bond pricing responds to rate changes.

Calculate bond pricing as present value of future cash flows, including coupon payments and maturity par, discounted at the required yield, showing why bonds trade at premium, discount, or par.

Learn to price bonds by discounting coupon payments as an ordinary annuity and discounting the par value at the required yield to present value.

Learn to price a plain vanilla bond by discounting semiannual coupons and par value to present value using yield, and price zero-coupon bonds as deep discounts.

Calculate bond prices across payment periods by adjusting formulas for different bond types, and learn to compute accrued interest using day count conventions like actual/actual and 30/360.

Learn how day count conventions affect accrued interest and bond pricing by comparing actual by actual and 30 by 360, distinguishing clean and dirty prices, and understanding yield.

Understand yield as the effective rate of interest on a security that accounts for price changes and capital gains, unlike the coupon rate paid on face value.

Understand yield as the return from holding a bond to maturity. Learn how current yield compares the annual coupon to market price, not face value.

Explore yield to maturity and how time value of money shapes fixed income returns, including current yield, adjusted current yield, dirty price, and zero coupon bonds.

Explains the price relationship and yield to maturity for bonds under reinvestment assumptions, using a 100 par, 95.92 price, 5% coupon, semiannual payments, and a trial-and-error yield calculation.

Analyze yield to maturity by matching bond price to yield, drill down to precise rates, and explore yields for callable and putable bonds, including yield to call, put, and worst.

Understand yield to maturity as the bond’s return to maturity, with coupons reinvested at a constant rate, and the inverse price-yield relationship across premium, discount, and par bonds.

Explore how yield relates to maturity and the concept of a yield curve. See how the curve plots yields to maturity for benchmark fixed income securities.

Explore how flat, normal, and inverted yield curves shape risk-return choices, with short versus long maturity securities, and how coupons and zero coupon assumptions affect curve estimation.

Explore yield curves comparing treasury and corporate yields, and how credit spreads reflect risk and credit quality.

Learn how duration measures the time to recover a bond’s investment through its cash flows, and how coupon payments and maturity shape its risk and price volatility.

Explore how coupon rate and yield shape bond duration, learn macro duration calculation, and see why duration, not maturity, guides fixed income investments.

Learn how modified duration, a version of duration that accounts for changing interest rates, measures a bond's price sensitivity to yield and helps compare bonds by price volatility.

Explore fixed income securities, issuers, and market dynamics while examining valuation, credit analysis, and rate structures in the arbitrage-free framework.

Explore the four principal repayment structures for fixed income: bullet, amortizing, partially amortized with balloon payment, and sinking fund, and understand their cash flow implications.

Explore the coupon repayment structure across fixed and floating rate bonds, including step up, credit linked, payment in kind, deferred, and index linked coupons, and callable, putable, or convertible options.

Explore global fixed income markets, including issuance, trading, and funding for governments and corporations. Grasp market structure, credit quality, currencies, and key indices like Barclays global aggregate.

Explore how the primary bond market raises capital via public offerings and private placements, with underwritten, best-effort, and auction offerings, and how secondary markets trade bonds on exchanges or over-the-counter.

Explore government related issuers - sovereign, non sovereign, quasi government, and supranational bonds - and corporate debt sources, including bank loans, syndicated loans, and commercial paper.

Explore corporate notes and bonds issued by private companies, with 1–10 year notes and 10–30 year bonds. Understand fixed, floating, and zero coupon structures, and bank funding with repo markets.

Learn how bond prices relate to coupon and market discount rates, trading at premium, discount, or par, and apply present-value valuation to determine price.

Analyze fixed income valuation by calculating accruals, pricing bonds at market discount rates with semiannual coupons, and applying yield to maturity to explain inverse price movements and convexity.

Explore how coupon and maturity drive bond price volatility, with longer and lower coupon bonds showing larger shifts, and use spot rates (zero rates) for no-arbitrage price valuation.

Explain how bond prices split into clean price and accrued interest to form the full price, using day-count conventions and present-value calculations to derive yields.

Calculate clean, dirty, and flat prices for euro bonds, and determine bond quantities from cash and prices, while computing accrued interest under actual/actual, actual/365, actual/360, and 30/360.

Calculate the certificate of deposit price using face value, issuance rate, and days between issue and maturity, then apply matrix pricing and interpolation to estimate bond yields.

Explore various yield measures, including yield to maturity, current yield, and government equivalent yield, and explain how floating rate notes determine interest with a reference rate and discount margin.

Explore how money market yields differ from bond yields, including discount and add-on rates, pricing formulas, and the role of spot, forward, and forward rate curves in valuation.

Explore fixed income risk and return by examining yield to maturity, credit and interest rate risk, and the sources of return: coupons, reinvestment, and capital gains or losses.

Examine how reinvested coupons affect the realized return, compare yield to maturity scenarios, and identify coupon reinvestment and market price risks across investment horizons in fixed-rate bonds.

Explore duration's role in fixed rate bonds' price sensitivity to yield to maturity, Macaulay duration, money duration, and related formulas.

Learn how to compute duration and approximate modified duration from bond prices, then explore approximate Macaulay duration, effective duration, and key rate duration for bond price sensitivity to yield curves.

Explain how bond duration measures interest-rate risk, detailing Macaulay and modified duration, yield to maturity effects, coupon and embedded options, and money duration for portfolio valuation.

Estimate bond price changes in HKD using money duration and modified duration with yield, and compute PVBP and convexity to refine full price estimates.

Explore approximate convexity and its calculation, contrasting money convexity and effective convexity. Demonstrate how small yield changes affect bond price and discuss implications for convexity, duration, and interest-rate risk.

Explain how credit risk and default probability determine expected loss via loss given default. Assess how recovery rates, spread risk, and market liquidity interact with capital structure and seniority.

Explore how Moody's, S&P, and Fitch rate issuers and issues, the notching process, and limitations of credit ratings, then apply traditional credit analysis using cash flow measures and leverage ratios.

Explore how debt capital ratio, collateral, covenants, and management shape credit analysis and liquidity considerations for investment-grade and high-yield issuers, with emphasis on yield spreads and risk factors.

Explore credit analysis models and risk measures, including probability of default, loss given default, expected loss, and the present value of expected loss, with traditional scoring and ratings approaches.

Explore structural credit risk models that estimate the expected loss and its present value from asset and debt parameters using a log normal asset distribution.

Learn to compute the present value of expected loss and the impact of discounting and risk premia, and compare structural and reduced form credit risk models with hazard rate estimation.

Analyze asset-backed securities and securitization, including special purpose vehicles, credit enhancements, and tranching, with focus on mortgage loans, prepayment risk, and recourse versus non-recourse loans.

Explore residential mortgage backed securities, including agency and non-agency structures, pass-through mechanics, prepayment models (smm, cpr, psa), and collateralized mortgage obligations with tranches and contraction and extension risks.

Explain how commercial mortgage backed securities pool income producing property loans, assess risk with loan-to-value ratio and debt-service coverage ratio, and apply call protection across amortizing and non-amortizing assets.

Analyze collateralized debt obligations by comparing senior, mezzanine, and equity tranches, calculating cash flows from swaps and coupons, and assessing securitization benefits across mortgage and non-mortgage assets.

Explore arbitrage-free valuation for fixed income securities, learning to strip and reconstitute cash flows, price bonds using spot and forward rates, and assess optioned bonds with interest rate trees.

Describe the binomial interest rate tree framework, a lattice model. Use backward induction to value bonds at each node with higher and lower forward rates, and discuss volatility estimation.

Price arbitrage-free bonds using a three-year binomial interest-rate tree, calibrate the lattice with forward rates, and verify results against zero-coupon yield curve via backward induction.

Calibrate a binomial rate tree to the zero-coupon yield curve and spot rates, price a 5% coupon bond, and discuss arbitrage-free results along with pathwise valuation and Monte Carlo methods.

Explore bonds with embedded options, including callable and putable features, conversion options, and sinking funds, and apply arbitrage-free valuation using forward rates to assess option value and overall bond value.

Learn how to value embedded options by comparing future bond cash flows with call and put prices, using par value, coupons, and forward rates.

Analyze default-free, callable, and portable bonds under interest rate volatility; compute option adjusted spread, effective duration, and valuation of bonds with embedded options and caps.

Learn valuation of floored floaters, including floor and cap protections, embedded options, and convertible bonds, combining straight bond values with option values under an arbitrage-free framework.

Explore the term structure of interest rates, analyzing spot rates, the spot curve, and discount functions, and derive forward rates and the forward curve from current spot rates for pricing.

Explore the term structure and interest rate dynamics, including bootstrapping the power curve, forecasting forward and zero coupon rates, and interpreting swap curves and swap spreads in fixed income valuation.

Explore how z-spread, TED spread, and LIBOR-OIS spread measure credit and liquidity, and examine term structure theories and modern models shaping yield curves and rate dynamics.

Examine the framework for fixed income portfolio management, distinguishing liability-driven and benchmark-driven objectives, and compare pure and enhanced indexing to active management across risk factors.

Examine stratified sampling and multi-factor models that capture bond risks by matching duration, convexity, key rate duration, and present value distributions.

Apply immunization to fixed income portfolios to manage funds against liabilities by locking in a guaranteed return over a defined time horizon through duration matching and dynamic rebalancing.

Explore immunization techniques, spread duration, and cash flow matching to manage liabilities, using duration matching, key rate durations, and contingent immunization under interest rate shifts.

Explore fixed income portfolio management with leverage, showing how borrowed funds and debt capacity affect returns and risk. Examine repos, collateral, and duration in shaping financing decisions.

Explore how repo and federal funds rates shape interest rates, assess portfolio risk via standard deviation, semivariance, shortfall risk, and value at risk, and apply futures for duration management.

Explore fixed income hedging, including duration-based cross hedges with futures, basis and regression analysis; use swaps, options, caps, floors, and credit derivatives for international bond risk management.

Explore currency risk and currency management in international fixed income, apply break even spread analysis, and perform due diligence to select managers for alpha in core plus and beyond.

Explore relative value methodologies for global credit portfolio management, blending top-down and bottom-up strategies with total return, liquidity, and spread analyses to optimize risk-adjusted returns.

Explore relative value approaches to global bonds, including mean reversion, quality and yield spread analyses, plus structural analysis of bullet, callable, sinking fund structures for enhanced risk-adjusted returns.

Learn pricing and valuation of fixed income instruments, from discounted bills to coupon bonds, with duration and dollar value per basis point change, plus trading and derivatives basics.

Explore coupon bond pricing for government securities using Excel formulas, linking par value, annual 5% coupons, maturity, settlement, and yield movements to premium or discount prices.

Discount the bond's cash flows to determine present value under varying yields, showing prices at 5% par, 6% about ₹93, and 4% about ₹106, with credit spreads for corporates.

Explore how corporate bond prices move with changing credit spreads and yields, illustrated by Vodafone, and learn to value bonds using par value, spot yields, forward yields, and yield curves.

Understand how the spot yield curve illustrates upward-sloping yields by maturity and contrasts spot yields with yield to maturity, including reinvestment implications.

Explain the difference between spot yield and yield to maturity, and introduce forward yield for bond valuation using coupons, present value, and discounting.

Calculate the coupon needed to price a two-year bond at par using the first-year and second-year spot yields, then compare the resulting yield to the respective spot yields.

Explore how spot yields shape the forward yield curve and how no-arbitrage conditions link short- and long-term returns, deriving forward yields from spot yields.

Explore yield curves with example data, pricing treasury instruments from 4% to 9% coupons across maturities from 2016 to 2019, and using par value pricing at 100 to plot curves.

Bootstrap the spot yield curve from YTM data, calculate six-month and one-year spot yields by discounting cash flows, and price government securities.

Explore how semiannual coupons, present value, and period-based discounting determine the relationship between ytm yield and bond valuation, including spot yields for multiple periods.

Derive spot yields and forward yields, including the one-year and six-month forward rates, by equating semiannual cash flows and enforcing arbitrage-free relationships.

Bootstrap the forward and spot yields from traded securities to price bonds, compare forward yields with spot yields, and apply present value discounting to cash flows.

Explore bootstrapping to price illiquid fixed income instruments, derive forward rates from spot yields, and apply forward rate agreements and swap rate concepts to bond valuation.

Bootstrap the two-year and three-year spot yields from liquid euro bonds to price illiquid government securities by discounting cash flows to ₹100 par.

Explain the swap rate by deriving a fixed coupon from LIBOR forward expectations and future cash flows, using a one-year quarterly coupon bond as illustration.

Explore how swap rates price interest rate swaps, calculate forward yields, and understand forward rate agreements, bootstrapping, and repo versus reverse repo dynamics.

Explore forward rate agreements and how to hedge liquidity by coordinating repo and reverse repo contracts, using spot yields to price 30-day and 60-day cash flows.

Explore fixed income instruments, including U.S. treasury bills, notes, and bonds, along with corporate and municipal bonds and securitized products like ABS and MBS, noting tax implications.

Explore after-tax returns between taxable and tax-exempt bonds, and examine corporate, mortgage-backed, and asset-backed securities, including callable and convertible features.

Calculate the present value of a two-year treasury by discounting semiannual cash flows of 3.75 at a 0.87% yield to estimate a price near 997.14.

Learn how bond prices move inversely with yields using fixed income treasury securities and cash-flow valuation. Use the yield curve and market yields to compute present value.

Learn to value treasury bonds using discounted cash flow by summing the present value of fixed coupons and par value, given a known yield and the inverse price yield relation.

Determine bond price by comparing coupon and yield, noting discounts below par when yield exceeds coupon and premiums above par when yield is below coupon, using Excel's price function.

Learn how zero coupon treasury bonds are valued using spot rates and forward rates, and how yield, coupon, and market rates affect bond prices.

Master spot rates and forward rates, and see how forward rates reveal mispricing. Use bootstrap methods to derive forward rates from one-year, two-year, and three-year spot rates for zero-coupon bonds.

Learn bootstrap and spot-rate methods to derive forward rates and price zero-coupon treasuries. Use three-year spot rates to price a 1000 USD payoff, assess undervalued or overpriced securities.

Explore the yield curve shapes—normal, flat, inverted, and humped—and how macro conditions and expectations shape forward rates, with a Japan example and liquidity premium on long-term securities.

Liquidity and liquidity premium shape the yield curve, explaining how they affect long-term vs short-term bonds and how market segmentation and preferred habitat influence yields.

Explore duration and convexity in bond valuation, showing how a one-year bond with a 10% coupon links yield changes to price inversely and the resulting moves.

Explore duration and convexity through a practical eight-year bond example, calculating duration via a cash-flow weighted average using coupons, par value, yield, and price.

Explore how effective duration links yield changes to bond price, reveal why duration alone misses curvature, and introduce convexity to refine bond price forecasts.

Explore how yield changes drive bond price through duration, quantify price impact of a 50 bp shift, and compare durations across par, discount, and callable versus noncallable bonds.

Explore bond pricing and duration by calculating the present value of annual coupon cash flows for a 6% coupon bond, showing how duration shortens as yield to maturity rises.

Explore how a semiannual paying bond alters duration, calculating per-period yields and cash flows, and showing that duration decreases as the number of periods increases.

Explore how duration and convexity shape bond pricing, compare linear duration with curvature, and see how yield to maturity changes (including semiannual cases) affect price risk.

Define fixed income basics by outlining bond features, principal and interest, and present value concepts. Explain issuer types from sovereigns to special purpose vehicles and how coupons affect valuation.

Define maturity and tenure for fixed income securities, and distinguish money market from capital market securities. Analyze par value, premium or discount, coupon payments, yield to maturity, and currency options.

Define bond indenture as the legal document backed by a trustee, outlining covenants, and explain domestic, foreign, and euro bonds, including registered vs bearer forms.

Explore secured and unsecured bonds with collateral, foreclosure, and seniority, then examine securitization via SPE/SPV, mortgage-backed and other assets, accounts receivable, and recourse in covered bonds.

Explore external and internal credit enhancements for bonds, including bank guarantees, surety bonds, letters of credit, overcollateralization, excess spread, and tranche waterfalls; cover tax treatment and capital gains or losses.

Analyze original issue discount and zero coupon bonds, their tax treatment as interest income, and fixed income structures like bullet, fully amortizing, sinking funds, and floating rate notes with caps and floors.

Explore fixed income cash flows, including variable rate and inverse floater coupons, step-ups, credit-linked notes, inflation-indexed bonds, and embedded options such as calls, puts, convertibles, contingent convertibles, and warrants.

Explore how fixed income markets issue, trade, and fund bonds, from credit classifications and maturities to fixed and floating coupon structures, LIBOR linked rates, and interbank dynamics.

Explore how bonds are issued in primary markets and traded in the secondary market, covering registration, underwriting, private placements, shelf registrations, and auction-based pricing.

Navigate the secondary market, dealer inventories, bid-ask spreads, and liquidity. Differentiate sovereign and non-sovereign debt, local versus foreign currency, and revenue bonds.

Examine agency and supranational debt, including Fannie Mae and Freddie Mac, and how corporate debt and commercial paper fund working capital via discount and add-on yields with distinct settlements.

Explore rollover risk in agency debt and how credit deterioration, backup lines of credit, and enhancements affect refinancing, with a concise overview of holding period, discount, and add-on yields.

Explore how fixed income securities issue, trade, and fund through serial bonds, MTNs, and short-term instruments, with mechanics of repos, LIBOR, and interbank funding.

Compute the bond price by discounting annual coupon cash flows and the face value at the market discount rate (yield to maturity) using present value and cash flow timelines.

Learn to compute yield to maturity for coupon bonds with semiannual payments, reinvested coupons, and present value calculations for a $1,000 par bond.

Explore how constant yield drives bond prices toward par, with premium and discount trajectories and associated capital gains or losses, and examine spot rates and zero rates valuation.

Value bonds with spot rates by discounting each cash flow at its own rate, and compute accrued interest using 30/360 or actual/actual day counts, distinguishing clean price from dirty price.

Compute forward rates from spot rates to value fixed income cash flows, using 1Y, 2Y, and 3Y forward conventions, and apply to forward-valued bonds.

Analyze forward rates and discount cash flows across varying rates to value fixed income, while comparing yield spreads, swaps, z-spreads, and option-adjusted spreads for callable bonds.

Apply matrix pricing to value illiquid fixed-income bonds by matching to liquid, AA-rated peers and using linear interpolation across maturities to estimate a non-traded bond’s yield.

Explore simple yield, where coupon payments and amortization move bonds toward par from a premium or discount. The lecture covers true yield and street conventions for comparison.

Learn how yield to call prices callable bonds using first call date and call price, and compare with yield to maturity and worst, including option adjusted spreads and call options.

Discover how floating rate notes set interest at the reset date as a reference rate plus a margin, and how margins, par value, and yield curves—from spot to forward—shape valuation.

Explore zero coupon bonds, which pay no coupons and mature at face value, and learn how present value shifts with semiannual yield to maturity and rate changes.

Explore convexity: how price reacts nonlinearly to yield changes, with larger gains when yields fall than losses when yields rise, and how longer maturities amplify sensitivity.

Explore the four c's of credit analysis—capacity, collateral, covenants, and character—and examine Porter's five forces, leverage and coverage ratios, and cash flow metrics to gauge risk.

Explore fundamentals of credit analysis, including default risk, loss severity, and expected loss. Examine yield spreads, downgrade risk, liquidity risk, and seniority from first lien to subordinated.

Understand seniority ranking and priority of claims, and how Moody's, S&P, and Fitch ratings—corporate family rating and corporate credit rating—affect notching up or down, issuer risks, yields, and spreads.

Explore municipal bonds, including general obligation and revenue bonds, and how tax-exempt interest relates to credit analysis. Assess local economies via employment, income, tax base, and reporting red flags.

Explains how spread changes affect bond returns using modified duration and convexity. High yield and sovereign bonds, liquidity sources, debt structure, covenants, and default risk considerations are discussed.

Learn to calculate bond return within fixed income, decomposing total return into principal, interest, and reinvestment under yield to maturity and the constant yield price trajectory.

Explore duration and convexity to quantify price changes under yield moves in fixed income instruments. Use the modified duration and convexity formula for yield and spread shifts.

Explore Macaulay duration as a weighted present-value measure of cash flows and price sensitivity to yield changes, compare to modified and effective duration with embedded options like calls and puts.

Explain effective duration on the yield curve with parallel shifts and embedded options, and compare macaulay and modified duration alongside portfolio and money duration.

Learn how changes in yield to maturity shape fixed income returns, including reinvestment income, price risk, and scenarios of holding to maturity vs selling before maturity.

Explore how embedded options, such as call and put options, shape the price-yield behavior of fixed income securities, showing how callability caps upside and puts set floor prices.

Analyze how a basis point shift in yield affects fixed income prices via duration and the price value of a basis point, and compare approximate and effective convexity.

Explore sources of bond return, including coupon and principal payments, and how reinvesting coupons at yield to maturity interacts with the constant yield price trajectory and held-to-maturity gains.