Bond Math: The Theory Behind the Formulas (Wiley Finance)
The U.S. bond market, which includes everything from Treasuries and investment-grade corporate paper to municipals and high-yield bonds, is one of the largest and most important markets in the world. In order to succeed in this arena, it helps to have a firm foundation in bond mathematics and a working knowledge of how certain bond numbers arecalculated as well as which ones are most useful.No one understands this better than author Donald J. Smith—an Associate Professor of Finance and Economics at Boston University's School of Management—who has been actively involved with executive education for over twenty-five years. And now, withBond Math, he shares his experience in this field with you.Filled with in-depth insights and expert advice, this reliable guide outlines the essential theory behind bond math formulas. Page by page, it skillfully explains the ideas and assumptions behind the commonly used statistics regarding the risk and return on bonds. The Bloomberg Yield Analysis(YA) page, which is widely used for bonds, is thoroughly explained and critiqued, indicating which numbers provide reliable information, which ones are meaningless data, and which ones can be misleading to investors.Opening with an informative chapter on money markets—where rates do not follow the classic "time-value-of-money" principles taught in introductory finance courses—Bond Mathquickly moves on to cover:Zero-Coupon BondsPrices and Yields on Coupon BondsBond TaxationYield CurvesDuration and ConvexityFloaters and LinkersInterest Rate SwapsRounding out this detailed discussion of bond mathematics are two chapters dedicated to bond portfolios and investment strategies,placing the math in perspective.Whether you currently work with bonds or aspire to, understanding the math behind bonds and then carrying out specific calculations with itis essential to investment success.Bond Mathwill put you in a better position to achieve this goal and show you what it takes to excel atthis difficult endeavor.