Why does a fixed-rate bond’s price fall when its required yield rises?
Price the same hypothetical payment at two discount rates to see what changes, what stays fixed and what the calculation cannot establish.
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Bonds & interest rates
Read bond cash flows, prices, yields, duration and credit or liquidity risk one assumption at a time.
Why are duration and maturity different measures of bond risk?
Separate a repayment date from a small-change price-sensitivity estimate with a hypothetical two-bond worksheet.
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How can a bond have both credit risk and liquidity risk?
Use separate cash-flow and resale ledgers to avoid treating a scheduled repayment, a rating and an executable sale price as the same evidence.
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How do coupon rate, current yield and yield to maturity differ?
Calculate three percentages from one invented annual-payment bond and identify the cash flows that each measure leaves out.
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What changes when a bond is called before its scheduled maturity?
A hypothetical call tree separates principal repayment, coupons that stop, and a lower-rate replacement cash-flow assumption.
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How can a bond’s yield fall while its credit spread widens?
A fictional two-date yield bridge separates a benchmark change from a change in the extra yield above that benchmark.
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How do fixed and floating coupons change a bond’s payment schedule?
A three-period reset ledger distinguishes face value, the contractual margin, the benchmark fixing, coupon timing, and a hypothetical cap.
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