Map the Bond Before the Yield
Identify the cash-flow parts of a bond before comparing yield.
Map the contract before you compare the yield. Issuer and promise A bond starts with the borrower. Treasury, municipal, agency, corporate, and securitized bonds all differ because the promise is backed by different sources of repayment and different legal structures. Cash-flow schedule Par value is the amount due at maturity. The coupon is the stated interest rate on par. Maturity is the date principal is due. Price is what you pay today, which may be above or below par. Features that can change the path Call provisions, floating rates, inflation adjustments, sinking funds, and fund structures can change timing, income,…
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