Bond Pricing and the Price-Yield Relationship

What this video covers

• The inverse relationship between bond prices and yields, and the logic behind why a 5% coupon must trade down when market rates jump to 7%
• How to classify a bond as discount, premium, or par based on coupon rate versus market rate, and the capital gain or loss at maturity
• Why every bond, no matter how deep the discount or how rich the premium, converges to exactly $1,000 par at maturity
• The two factors that drive price sensitivity (coupon and maturity), and why a 30-year zero-coupon bond is the most volatile fixed-income instrument
• What a basis point (bp) actually is, how 100 basis points equal 1%, and the roughly $0.10 dollar value of a single basis point on a par bond
• How corporate, municipal, and government bonds are quoted differently, including the municipal yield-basis trap and the Treasury 32nds convention
• Why a Treasury quote of 99-16 means $995.00, not $99.16, and why a muni quoted at 5.25 is a yield to maturity (YTM), not a dollar price