bonds

 


maturity = no. of years remaining for the maturity

coupon = interest paid every year (or 6 months) until maturity

frequency = interest paid, denoted by m = 

                    semi annual means 2

                    annual means 1

yield to maturity = %


bond value = present value of coupon + present value of principal

                    = coupon * [PV ytm, t] + principal * [PV ytm, t]

                        coupon * (1- 1/(1+r)t /r)


if yield goes down, price will go up

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