Fixed-income guide library
Understand the assumption before interpreting the number.
Cash Flows and Present Value
Build a regular bond price from dated payments, consistent discount periods and an explicit valuation boundary.
Coupon Versus Yield
Distinguish the contractual coupon, current income ratio and yield to maturity without confusing a premium with a better return.
Coupon Frequency and Compounding
Translate annual nominal yields into periodic rates and effective annual rates while preserving the actual coupon schedule.
Clean Price, Dirty Price and Accrued Interest
Reconcile quoted bond prices with accrued coupon amounts while keeping settlement conventions outside a coupon-date model.
Yield to Maturity and Reinvestment
Separate a bond's cash-flow internal rate of return from the compound growth of wealth when coupons are spent, retained or reinvested.
Zero-Coupon Bonds
Use a single maturity payment to understand discount factors, yield sensitivity and the limits of a no-coupon structure.
Macaulay and Modified Duration
Connect present-value-weighted payment timing to local yield sensitivity, with a transparent two-payment calculation.
Convexity and Approximation
Improve a duration estimate with a consistently defined second-order term, then measure the remaining error against exact repricing.
DV01 and Position Size
Translate a local percentage sensitivity into currency per basis point, with explicit position scaling and sign conventions.
Negative Yields
Understand above-face prices, discount factors greater than one and rate sensitivity when the assumed nominal yield is below zero.
Parallel and Nonparallel Yield Shocks
Specify which rates move, distinguish curve shape from level and compare simple spot-rate scenarios without implying a full curve engine.
Spot, Par and Forward Rates
Derive three rate descriptions from consistent discount factors and avoid treating a par curve as a set of zero-coupon discount rates.
Key Rate Duration: Locating Curve Exposure
Read maturity-specific rate sensitivities, define the curve bumps behind them, and distinguish a local approximation from full scenario repricing.
Yield Curve Interpolation: Choosing What Lies Between
Compare interpolation of rates and discount factors, inspect forward-rate consequences, and keep model-generated points separate from observations.
Curve Bootstrapping: What the Equations Can and Cannot Identify
Solve a small discount-factor example, then examine missing dates, inconsistent inputs and the limits of exact repricing.
Credit Spread Is Not a Default Probability
Separate a benchmark-relative yield difference from expected loss, recovery assumptions and the risk of an actual payment failure.
Spread Duration: Sensitivity Without a Default Forecast
Convert spread changes into first-order value estimates while preserving benchmark assumptions, basis-point units and the distinction from default loss.
Callable Bonds: Why Fixed Cash Flows Stop Being Enough
Identify the cash-flow, valuation and sensitivity assumptions that fail when an issuer can redeem a bond before its stated maturity.
Inflation-Linked Bonds: Fixed Rates, Variable Nominal Payments
Distinguish a fixed coupon rate from inflation-adjusted payment amounts, and examine real yields, principal floors and purchasing-power mismatches.
Liquidity and Transaction Costs: From Model Value to Usable Cash
Distinguish theoretical valuation from transaction proceeds, label cost allowances and avoid treating a recent price as guaranteed execution.
Bond Ladder Cash Flows: Separate Coupons from Returned Principal
Build a dated ladder receipt schedule, reconcile its totals and distinguish a ladder that runs off from one that reinvests maturing principal.
Reinvestment and Roll-Down: Two Different Return Assumptions
Trace coupon reinvestment and maturity-related repricing separately, and distinguish an unchanged-curve scenario from a promised future return.
Liability Matching: Compare Dates Before Comparing Duration
Build a simple cash-flow match, distinguish it from duration matching and identify the assumptions that can leave an apparent surplus unavailable for payment.
Fixed-Income Model Validation: Prove the Calculation and Its Limits
Build an independent review of cash-flow construction, compounding, library signs, numerical behavior and the claims a narrow bond model can support.
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