Intermediate · I9
How Bonds Actually Work
Bonds often play the steadier role in a plan. Steadier is not the same as safe. This module shows what a bond is, why its price changes, what duration tells you, and why bonds can still have a bad year.
By the end of this module, you’ll be able to:
- Explain who borrows, what they pay and when a bond ends.
- Tell coupon, market price and yield to maturity apart.
- Explain why existing bond prices can fall when new bond yields rise.
- Tell selling before maturity from holding to maturity.
- Use duration to estimate a bond’s price response to a yield change.
4 parts · about 40 minutes
- 1The loan you’re making: the certificate, and what a lender gives up
- 2Why the price moves: the pricer, and selling versus holding
- 3Duration: the sensitivity number, and the sandbox
- 4The year everything fell: 2022 from the beginning, then How Bonds Actually Work in one page + a quick check
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