Bond Prices And How They Are Related To Yield to Maturity (YTM)

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In this video, you will learn how to calculate the price of a bond. In the process, you will also learn what is meant by a bond's Yield to Maturity (YTM), and why bond prices and yields are negatively related to each other.
This video will also help you understand why/when some bonds trade at a discount (i.e. at a price LESS than their face value), why some trade at a premium (i.e. at a price that is GREATER than their face value), and why some trade AT PAR (i.e. at a price EQUAL to their face value).
Finally, and perhaps more importantly, after watching this video you will clearly understand the distinvtion between a bond's coupon rate and its YTM.
Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance by Ross, Westerfield, Jaffe and Jordan.

Опубликовано:

9 ноя 2022

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Комментарии : 42

@friendlyneighbourhood2051

WHAT A CLEAR WAY TO TEACH.....................GOD BLESS YOU!!!

@andreykirillov4436

Don't let this setback define your trading journey. Keep working hard and striving for success.

@santhoshram45 Год назад

Very clear and concise explanation. Thank you Ikram! I'm a PG student trying to get into finance and this helps. Looking forward for more such videos

@jrs7541

so which is better? the present value being higher than the face value or the present value being lesser than the face value? Please explain.

@sandyrl7085

Good video! I have a question when the rr increased to 10% the value of the Bond became 877, and when It decreased to 6% It became 1147. Even tho the rr changed by the same amount, the price didnt change by the same amount. 1000-877 = 123 dollar price change, and 1147 -1000 147 dollar price change. Is this due to positive convexity in the Bond?

@user-uw6xs3ow5b

Clearest explanation of this I have seen yet, and I've been bouncing around multiple videos, audio books, etc. Thank you.

@himanshubarnwal934

can we say that YTM is equal to discounted rate ?

@BigFish-ii8zd Год назад

This is a very good video. It is clear and avoids ambiguity (which other videos and explanations about these concepts often do). Keep up the good work. The way to go is simple and clear.

@mwp6662

How do you determine the investor's required rate of return? Is it the next best available rate of return on an available safe asset, or maybe fed rate?