Back to Basics

Bonds usually start their life at, or close to, a price of 100 and at maturity they usually finish at a price of 100 as well. However, during a bond's life the price increases and decreases in accordance with the yield that the bond delivers to its investors. To price a bond you need to know a minimum of three pieces of information: interest paid by the bond (coupon); yield to maturity; time to maturity.

A bond's price is simply today's value of each of the interest payments and the final value

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