Bond Prices And How They Are Related To Yield to Maturity (YTM)

In this video, you will learn how to calculate the price of a bond. In the process, you will also learn what is meant by a bond's Yield to Maturity (YTM), and why bond prices and yields are negatively related to each other.

This video will also help you understand why/when some bonds trade at a discount (i.e. at a price LESS than their face value), why some trade at a premium (i.e. at a price that is GREATER than their face value), and why some trade AT PAR (i.e. at a price EQUAL to their face value).

Finally, and perhaps more importantly, after watching this video you will clearly understand the distinvtion between a bond's coupon rate and its YTM.

Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance by Ross, Westerfield, Jaffe and Jordan.