Chapter 5 preview
Chapter 5: Fundamentals of Debt
Chapter 5 covers how bond prices and yields interact. When market rates rise, bond prices fall — and the reverse. Know the three yield measures: nominal (coupon), current yield, and yield to maturity. For a discount bond, coupon < CY < YTM; for a premium bond, the order reverses. Duration measures price sensitivity to rate changes. Zero-coupon bonds accrete toward par, with annual imputed interest taxed even though not received.
Chapter summary
Chapter 5 covers how bond prices and yields interact. When market rates rise, bond prices fall — and the reverse. Know the three yield measures: nominal (coupon), current yield, and yield to maturity. For a discount bond, coupon < CY < YTM; for a premium bond, the order reverses. Duration measures price sensitivity to rate changes. Zero-coupon bonds accrete toward par, with annual imputed interest taxed even though not received.
This public preview shows the chapter scope without exposing the private reader, flashcards, mapped practice, notes, or progress tools. Full chapter study unlocks after access is active.
Key concepts
- Fixed-Income Securities
- Why Bond Prices Fluctuate from Par
- Bond Pricing
- Prices and Yields: An Inverse Relationship
- Redeeming Bonds
- Tax Issues Associated with Debt Securities
- Fixed-Income Securities
- Why Bond Prices Fluctuate from Par
- Bond Pricing
- Prices and Yields: An Inverse Relationship
Unlock the full chapter loop
Full access opens the private chapter reader, section-tagged flashcards, mapped questions, progress tracking, and the timed exam simulation.