Advanced Bond Concepts: Conclusion
You have now learned some of the more advanced topics associated with bonds. Let's run through a quick recap of what we discussed in this tutorial:
 Bonds vary according to characteristics such as the type of issuer, priority, coupon rate, and redemption features.
 Bond prices may be either dirty or clean, depending on when the last coupon payment was made and how much interest has been accrued.
 Yield is a measure of the income an investor receives if he or she holds a bond until maturity; required yield is the minimum income a bond must offer in order to attract investors.
 Current yield is a basic calculation of the annual percentage return an investor receives from his or her initial investment.
 Yield to maturity is the resulting interest rate an investor receives if he or she invests all coupon payments at a constant interest rate until the bond matures.
 The term structure of interest rates, or yield curve, is useful in determining the direction of market interest rates.
 The yield curve demonstrates the concept of the credit spread between corporate and government fixed income securities.
 Duration is the time in years it takes a bond's cash flows to repay the investor the total price of the bond.
 A convex line is formed when the yield and price of a bond is graphed, and this line can exhibit positive or negative convexity.
 If we draw a line tangent to the convex priceyield curve, we draw a line that is equal to duration. The relationship between the linear duration line and the convex priceyield curve allows us to determine the accuracy associated with using modified duration.
 Bonds with greater convexity exhibit less volatility when there is a change in interest rates.
RELATED TERMS

Convexity
A measure of the curvature in the relationship between bond prices ... 
Negative Convexity
When the shape of a bond's yield curve is concave. A bond's convexity ... 
Convexity Adjustment
The change required to be made to a forward interest rate or ... 
Bond
A debt investment in which an investor loans money to an entity ... 
Required Yield
The return a bond must offer in order to be a worthwhile investment. ... 
Yield Curve Risk
The risk of experiencing an adverse shift in market interest ...
RELATED FAQS

How is convexity used in risk management?
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What is the correlation between a coupon rate and the convexity of a given bond?
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You currently are holding a portfolio of bonds. Interest rates are expected to increase ...
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How can I calculate convexity in MATLAB?
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How can I calculate convexity in Excel?
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If I buy a $1,000 bond with a coupon of 10% and a maturity in 10 years, will I receive ...
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