Chapter 10 - Slides 20-39 - The Yield Curve, Bond Valuation
Author(s): Paiano, Frank
College: Southwestern College
Subject: Banking and Finance
In this presentation, we start by looking at yield spreads and the yield curve and how the yield curve has been a very good indicator of the near-term future of the economy. We then turn our attention to the task of computing the value of a bond. The method should look very familiar since it is almost exactly the same as one of the methods we used for computing the value of a stock. The big difference is bonds are far more predictable than stocks so we can assign a much higher level of confidence to our results. But always remember, there are no guarantees when you invest in either stocks or bonds!
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