Introduction to Bonds
 Description and Pricing

What are bonds?

Types of Bond Issuers

Varieties of Cashflow Patterns

Callable Bonds

Convertible Bonds

Puttable Bonds

Floating Rate Bonds

Preferred Stock

Credit Risk

Calculation of default premium
A simple model

Risk Premium

Covenants in Bond Indentures

Bond Pricing

Bonds with semi-annual coupons

Bond Pricing

The Relation between Bond Prices and Yields

Bond Prices and Yields
A Graphic View

Bond Yield Measurement

Bond Yield Measurement: Examples

Computing YTM by Trial and Error

Computing YTM by Trial and Error:
A Graphic View

Approximate formula for yield-to-maturity

Realized Compound Yield

Holding Period Return

Time Pattern of Bond Prices

Time Pattern of Bond Prices: Graphic View

Time Pattern of Bond Prices in Practice

Tax treatment of bonds