Product Overview

This note introduces students to the basics of bonds and the time value of money through a simple bond contract?the risk-free bond contract. The note covers the concepts of present value, yield to maturity, coupon payment, and bond pricing conventions. An exhibit provides an overview of general bond trading terminology.

Learning Objectives

1) Introduce the concepts of present value, discounting, and the time value of money; 2) Expose students to bond math, including the concepts of yield to maturity, interest compounding, and the inverse relation between bond prices and yields.