3
Fixed IncomeModule 3 of 5

Fixed-Income Bond Valuation

4

Concepts

4

Formulas

1

Decisions

3

Quiz Questions

Explore the Learning Dashboard

Key Concepts

4 concepts covered in this module.

Bond Pricing

PV of future cash flows discounted at YTM. Premium: coupon > YTM. Discount: coupon < YTM. Par: coupon = YTM.

Spot Rates

Yields on zero-coupon bonds. Used to discount each cash flow at the appropriate maturity rate.

Premium +2 more

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

Formulas

4 essential formulas for this module.

Bond Price (YTM)

P = Σ C/(1+y)t + FV/(1+y)n

Where: y = YTM per period

Bond Price (Spot Rates)

P = C/(1+S1) + C/(1+S2)² + ... + (C+FV)/(1+Sn)n

Where: St = spot rate for maturity t

Premium +2 more

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

Decision Frameworks

1 decision frameworks to guide your analysis.

When does a bond trade at premium/discount?

  • Premium: coupon rate > market yield (investors pay extra for higher coupons)
  • Discount: coupon rate < market yield
  • Par: coupon rate = market yield

Mind Map

Visual overview of how concepts connect in this module.

Premium

This module is part of Premium

Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.

  • 10 subjects · 59 modules
  • 725+ flashcards
Free Study Dashboard

Don't just read Fixed-Income Bond Valuation — practice it

Everything on this page becomes interactive on the study dashboard, free.

  • 9 interactive flashcards built from this page
  • 3 exam-style quiz questions with instant scoring
  • Progress tracking across all 5 Fixed Income modules
Open Study Dashboard

No signup required. Create an account anytime to save progress.

Try it right here

Flashcard

Bond Pricing

Tap to reveal the answer

Answer
PV of future cash flows discounted at YTM. Premium: coupon > YTM. Discount: coupon < YTM. Par: coupon = YTM.
Sample 1 of 4
Study all 9 flashcards on the dashboard

Previous Module

Fixed-Income Cash Flows and Types

Next Module

Interest Rate Risk and Duration