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Principles learned

V b = f (n,k,c and M) V b inversely related with k V b positively related with c and n Given any four, able to compute the fifth If c = k, Vb = M (selling at par) If c > k, Vb > M (selling at premium) If c < k, Vb < M (selling at discount). Change in Vb = Bond Price Volatility (BPV)

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Principles learned

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  1. Vb = f (n,k,c and M) Vb inversely related with k Vb positively related with c and n Given any four, able to compute the fifth If c = k, Vb = M (selling at par) If c > k, Vb > M (selling at premium) If c < k, Vb < M (selling at discount) Change in Vb = Bond Price Volatility (BPV) BPV = f (change in n, k and c) ST bonds less price sensitive compared to LT bonds as a result in changes in k High yield (coupon) bonds less price sensitive compared to Low yield bonds BPV increases as a results of increases in changes in k Principles learned

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