Preface
1 Introduction
Learning Objectives
Sectors of the U.S. Bond Market
Overview of Bond Features
Risks Associated with Investing in Bonds
Overview of the Book
Questions
2 Pricing of Bonds
Learning Objectives
Review of Time Value of Money
Pricing a Bond
Complications
Pricing Floating-Rate and Inverse-Floating-Rate Securities
Price Quotes and Accrued Interest
Key Points
Questions
3 Measuring Yield
Learning Objectives
Computing the Yield or Internal Rate of Return on any Investment
Conventional Yield Measures
Potential Sources of a Bond's Dollar Return
Total Return
Applications of the Total Return (Horizon Analysis)
Calculating Yield Changes
Key Points
Questions
4 Bond Price Volatility
Learning Objectives
Review of the Price-Yield Relationship for Option-Free Bonds
Price-Volatility Characteristics of Option-Free Bonds
Measures of Bond Price Volatility
Convexity
Additional Concerns When Using Duration
Do Not Think of Duration as a Measure of Time
Approximating a Bond's Duration and Convexity Measure
Measuring a Bond Portfolio's Responsiveness to Nonparallel Changes in Interest Rates
Key Points
Questions
5 Factors Affecting Bond Yields and the Term Structure of Interest Rates
Learning Objectives
Base Interest Rate
Benchmark Spread
Term Structure of Interest Rates
Swap Rate Yield Curve
Key Points
Questions
6 Treasury and Federal Agency Securities
Learning Objectives
Treasury Securities
