Bond Valuation & Yield to Maturity (YTM) | Finance Course

For more resources, visit https://FarhatLectures.com Learn bond valuation, bond pricing, and yield to maturity (YTM) with Farhat Lectures. This finance course helps students understand how bonds are valued, how current yield differs from YTM, and how interest rates, inflation, credit risk, and bond features affect prices and returns. Designed for students taking introductory finance, corporate finance, financial management, or investments, this 10-lesson playlist connects bond valuation calculations with the fundamentals of fixed-income securities. CPA and CMA candidates can also use these lessons to strengthen their understanding of finance concepts. WHAT YOU WILL LEARN • Value a bond using the present value of coupon payments and face value. • Distinguish yield to maturity, current yield, and the coupon rate. • Understand bond trading, government bonds, and after-tax returns. • Compare expected returns with promised returns on corporate bonds. • Connect bond ratings and default risk with required returns. • Explain interest rates, inflation, and Treasury Inflation-Protected Securities (TIPS). • Understand the term structure of interest rates and the yield curve. • Identify callable, puttable, and convertible bond features. VIDEO GUIDE — CURRENT PLAYLIST ORDER 1. Introduction to Bond Valuation 2. Yield to Maturity (YTM) vs. Current Yield (CY) 3. Investment in Government Bonds: After-Tax Return 4. Bond Trading and the Bond Market 5. Corporate Bonds: Expected Return vs. Promised Return 6. Bond Ratings Explained 7. Relationship Between Interest Rates and Inflation 8. Treasury Inflation-Protected Securities (TIPS) Explained 9. Term Structure of Interest Rates 10. Bond Features: Callable, Puttable, and Convertible BOND VALUATION QUESTIONS AND ANSWERS How do you calculate a bond's value? For a standard fixed-coupon bond, bond value equals the present value of its remaining coupon payments plus the present value of the face value repaid at maturity. Discount these cash flows using the required return for the payment period. For semiannual payments, match the coupon amount, discount rate, and number of periods to that payment frequency. What is yield to maturity (YTM)? YTM is the discount rate that equates a bond's market price with the present value of its promised coupon and principal payments through maturity. It is commonly quoted as an annual rate. YTM is not a guaranteed realized return: actual results depend on payments received, coupon reinvestment rates, and whether the bond is sold before maturity. How do the coupon rate, current yield, and YTM differ? Coupon rate = annual coupon payment ÷ face value. Current yield = annual coupon payment ÷ current market price. YTM considers the timing of all promised payments through maturity, including the difference between the purchase price and face value. Why do bond prices fall when interest rates rise? For a fixed-coupon bond, a higher required market yield lowers the present value of its future payments, so its price falls. A lower required yield raises its price, all else equal. What do bond ratings tell us? Bond ratings assess credit risk, including the issuer's ability to meet its payment obligations. The corporate bond and ratings lessons help explain why promised returns can differ from expected returns. What is the yield curve? A yield curve plots yields against maturities for comparable debt securities. It illustrates the term structure of interest rates. Study it alongside the lessons on inflation and TIPS to connect bond valuation with the broader interest-rate environment. What are callable, puttable, and convertible bonds? A callable bond gives the issuer a right to redeem it early under specified terms. A puttable bond gives the holder a right to sell it back under specified terms. A convertible bond can be exchanged for shares under its conversion terms. HOW TO STUDY THIS PLAYLIST Begin with Introduction to Bond Valuation, then compare YTM with current yield. Practice identifying face value, coupon payments, maturity, and the required return before solving a valuation problem. Continue through the lessons on markets, credit risk, inflation, and bond features to understand what drives bond prices and returns. Use this playlist for finance homework support, course exam review, and a foundation in fixed-income analysis. Farhat Lectures provides accounting and finance instruction for students and professional exam candidates. #BondValuation #YieldToMaturity #CorporateFinance