Bonds and Bond Yields

Bonds and Bond Yields

Lindsey Matthews

30 years: Risk management & derivatives trading

Lindsey begins his series by explaining what a bond is, why people invest in them and the factors you should consider when investing.

Lindsey begins his series by explaining what a bond is, why people invest in them and the factors you should consider when investing.

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Bonds and Bond Yields

13 mins 29 secs

Overview

Rather than borrowing from a bank, large companies, banks and sovereign governments borrow money in the capital markets by issuing bonds. A bond is a security representing debt of an issuer. Bond buyers are the lenders; bond issuers owe lenders money and pay periodic interest to them. Interest payments a.k.a. coupons, are expressed as a percentage of the money borrowed. Key determinants of bond value are coupon, price and yield.

Key learning objectives:

  • What is a bond?

  • Why invest in Bonds?

  • Bond prices, cashflows and values

  • Yields, yield-to-maturity and the yield curve

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Summary
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Expert
Lindsey Matthews

Lindsey Matthews

Lindsey runs Perfordiant, an investment risk and performance consulting firm. He has worked in financial markets since 1992. Lindsey became an MD in fixed income and equities, ran a Risk function, and was on the management team of an Asset Management fintech business. Lindsey is now a Visiting Fellow at the Henley Business School, and resides on the board of CFA UK.

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