yuhu's crazy ideas

关于bonds, muturity, the yield, yield curve(term structure)

Bonds of different matuities each have aprice and an associated interest rate called the yield to maruity, or simply the yield.

Yields on bonds with a short matuity, typically a year or less, are called short-term interest rates. Yields on bonds with bonger maturity are called long-term interest rates.

The relationship between maturity and yield is called the yield curve, or the term structure of interest rates. (the word term is synonymous with matuity.)

** Yield curve= term structure of interest rate

The payments before maturity are called coupon payments. The final payment is called the face value of the bond. The ratio of coupon payments to the face value is called the coupon rate. The current yield is the ratio of the coupon payment to the price of the bond.

e.g.

A bond with coupon payments of $5 each year, a face value of $100, and a price of 80 has a a coupon rate of 5% and a current yield of 5/80=0.0625=6.25%.

posted by yuhu @ 4:21 PM