Bond Pricing and Yield Mechanics

Everyone can recite that price and yield move opposite ways. Far fewer can explain why without reaching for the phrase itself. This course prices a bond from its cash flows, moves the yield, and gives you the derivation to say it out loud.

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Six things you will be able to do

Go past the memorised rule. Learn the arithmetic underneath it, so the direction is something you derive rather than recall.

01 Lay out the cash flowsEvery coupon and the principal, placed on a timeline before anything is discounted.
02 Discount them to todayBuild the price from the ground up, one discounted payment at a time.
03 Explain the inverse relationshipWhy a higher discount rate shrinks every term, said out loud without the slogan.
04 Read premium, par and discountWhat the price tells you about the coupon relative to the market.
05 Separate the yield measuresCurrent yield, yield to maturity and yield to call, and which one answers your question.
06 Handle clean and dirty priceAccrued interest, settlement dates, and why the quoted price is not what you pay.
The outcome

What changes after this course

You stop quoting price up, yield down and start deriving it, from the cash flows, in one sentence, with the arithmetic behind you.

A bond priced from its cash flows, by hand, before any calculator is opened

The yield moved and the new price computed, with the direction explained

The right yield measure chosen for the question actually being asked

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