Fixed Income Securities

Examine bond characteristics, including fixed and variable coupon rates, face value, maturity, interest payment dates, and accrued interest during trading.

Explore day count conventions and ip periods for calculating interest, from 30/360 to actual by actual or 365, and classify bonds by issuer, coupon, and redemption features.

Explore callable, putable, and convertible bonds with embedded options that affect redemption timing and pricing; understand how fixed income securities offer predictable income, capital protection, and long-term issuer funding.

Analyze investor risk in fixed income securities by examining interest rate risk, inflation risk, and credit risk, and how bond prices respond to rate movements and ratings.

Analyze how bond pricing values fixed income securities by discounting future cash flows—coupon payments and par value at maturity—to present value under market yields, determining premium or discount pricing.

Learn how to price a plain vanilla bond by discounting coupon payments as an ordinary annuity and discounting the maturity value at the required yield to obtain present value.

Explore how bond prices relate inversely to market yield with a plain vanilla bond example showing a price of 885.32 versus par 1000, and a zero-coupon case.

Price bonds between payment periods by applying accrued interest and day count conventions such as actual by actual or 30 by 360 in the secondary market for precise yields.

Explore day count conventions like actual by actual and 30 by 360, accrued interest, and the clean versus dirty price, plus the inverse price-yield relationship.

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

Define yield as the return from holding a bond to maturity and show current yield equals annual coupon divided by market price, not face value.

Explore how yield to maturity, the internal rate of return, captures time value and all cash flows, contrasting with current yield and adjusted current yield.

Understand yield to maturity under the reinvestment at a constant rate assumption for a bond held to maturity with semiannual coupons, and how price and yield relate inversely.

Derive yield to maturity from bond price via coupon and present value. Explain how call and put options adjust yields to call, put, or worst, reflecting internal rate of return.

Explore yield to maturity and the inverse bond price–yield relationship with discounts, premiums, and par pricing. See how coupon rates, reinvestment, and bond type influence yield calculations in fixed income.

The yield curve graphs the term structure of interest rates by maturity, showing shapes such as normal, flat, or inverted and indicating future rate movements for investors.

Explore how normal, flat, and inverted yield curves shape investors' risk return trade-offs across maturities, with implications for fixed income securities and bond valuation.

Explore yield curves and the credit spread between government and corporate bonds. Understand how inflation and rates affect spreads and the inverse yield price relationship, plus the concept of duration.

Learn how duration measures the time to recover a bond’s price through cash flows, comparing zero-coupon and coupon bonds, and understanding how coupons affect duration and risk.

Understand how coupon rate and yield influence bond duration, why higher coupon or higher yield shorten duration, and the macro duration formula using the present value of cash flows.

Explore how modified duration, derived from macro duration and yield, measures a bond's price sensitivity to interest rate changes and aids comparison of bonds and risk assessment.