A bond price values dated payments; its coupon describes the contract; its yield summarises the price under a rate convention. These are different quantities. This lesson applies discounting to bond payments and calculates a price from a yield. Keeping the distinction clear prevents errors when you compare funding rates or interpret interest-rate risk.
In this lesson
- Learning objectives
- Cash flows and prices
- Reading a yield curve
- Discount each promised payment
Before you start
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