Bond Prices And How They Are Related To Yield to Maturity (YTM)

In this video, you will learn how to calculate the price of a bond. In the process, you will also learn what is meant by a bond's Yield to Maturity (YTM), and why bond prices and yields are negatively related to each other.

This video will also help you understand why/when some bonds trade at a discount (i.e. at a price LESS than their face value), why some trade at a premium (i.e. at a price that is GREATER than their face value), and why some trade AT PAR (i.e. at a price EQUAL to their face value).

Finally, and perhaps more importantly, after watching this video you will clearly understand the distinvtion between a bond's coupon rate and its YTM.

Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance by Ross, Westerfield, Jaffe and Jordan.

[steve]

SIR YOU LITERALLY JUST SAVED MY LIFE, I HAVE BEEN SO CONFUSED ABOUT THIS FOR WEEKS AND YOUR EXPLANATION CLEARED EVERYTHING UP. THANK YOU SO MUCH!!

[LoganS-fp]

Clearest explanation of this I have seen yet, and I've been bouncing around multiple videos, audio books, etc. Thank you.

[lg]

This vid should have way more views as it addresses precisley the confusion points most people have when it comes down to bond pricing.

[santhoshram]

Very clear and concise explanation. Thank you Ikram! I'm a PG student trying to get into finance and this helps. Looking forward for more such videos

[darnellbailey]

Well explained. Once you understand the difference between price and value, the outlook of the explanation given becomes easier.

[BigFish-iizd]

This is a very good video. It is clear and avoids ambiguity (which other videos and explanations about these concepts often do). Keep up the good work. The way to go is simple and clear.

[nadalahlou]

God bless you professor, very clear explanation 👏

[ianchang]

I have been struggling with this for months. Thank you so much for making it clear

[wannabeabagel]

you are so talented in teaching finance! you saved my life in my exam

[mackaylaramdhanie]

the best explanation i have heard, and trust me, i have watched A LOT of videos thank you so much!!

[Bubbles-odtv]

Thanks so much, your explanation is so intuitive and clear.

[zan]

Hopefully this lets me understand your interest rate risk and reinvestment risk video now. I didn't think in the direction of bond prices which was helpful. But I keep getting confused in current yield and yield to maturity. And then people start saying stuff like interest rate went up and I start thinking about bank interest rates going up instead of an investor's required rate of return. My mind is a mess right now lol.

Edit: Wait you have a video on that too what the heck. Actual life saver.

[lenguyenquynhanh]

Thank you so much! You are breaking the concepr down in a much more understandable way!!

[sumaraweerakoon]

Thank you so much for explaining everything in detail.Keep up the good work !

[JessMe-xh]

Thank you so much for the clear explanation!

[zohanaslam]

you are my FAVVV TEACHERR, THANKYOUSSS

[maxwellelias]

Awesome explanation! Thank you very much!

[diegodabson]

thank you so much for those clear explanations, IN CRE DI BLE teaching skills.

[chikstnt]

Thank you so much. could you create a series of videos about a topic of analysis of financial statment, please?

[sunghkim]

Awesome stuff! Thanks Ikram! Can you also please make your magical video on the hypothesis testing and Jarque-Bera Test when you have chance?