Bond Valuation Explained: Why Bond Prices Fall When Interest Rates Rise

Описание: 📓 Interactive Notebook: https://ludium.ai/courses/finance-the...

In 2022, investors holding "safe" U.S. Treasury bonds lost over 12%—their worst year in decades. How can something "risk-free" lose money? This video reveals one of the most important relationships in finance: the inverse relationship between bond prices and interest rates. You'll learn to value any bond yourself using time value of money principles.

📚 Key concepts covered:
• Bond valuation as time value of money applied to fixed, known cash flows
• Why bond prices move opposite to interest rates (it's mechanical, not mysterious)
• Coupon bonds vs. pure discount bonds—different arrangements of the same principle
• How STRIPS decompose coupon bonds into individual discount bonds
• The pricing formula P = F/(1+r)^t and how to use it
• Reading bond prices as market forecasts of future interest rates

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📖 ORIGINAL SOURCE
This video distills concepts from academic finance lectures on fixed income securities.
Source:    • Ses 4: Present Value Relations III & Fixed...  

All credit for the original educational content belongs to the original creator. This video aims to make these important concepts more accessible through condensed presentation.

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📢 About Lecture Distilled
Long lectures. Short videos. Core insights.

We distill lengthy academic lectures into focused concept videos that respect your time while preserving the essential knowledge. Our goal is to make quality educational content more accessible.

🔗 GitHub: https://github.com/Augustinus12835/au...

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