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A Tutorial on Bonds, Yield Curves and Duration

Author

Listed:
  • E. Tylor Claggett

    (Salisbury University)

Abstract

This paper develops and refines a quick method for analyzing bond yields until maturity given their market price. It briefly discusses bond ratings and defines yield curves and examines their characteristics, uses and how information can be derived about the market sentiment by their analysis and study. Next, the paper introduces duration as an ?elasticity? that measures a fixed income instrument?s sensitivity to the interest rate changes. Finally, the article demonstrates how the concepts associated with duration can be used to reduce or eliminate a interest rate risk as it pertains to financial assets and the investment portfolios (i.e. immunization).

Suggested Citation

  • E. Tylor Claggett, 2014. "A Tutorial on Bonds, Yield Curves and Duration," Proceedings of International Academic Conferences 0902889, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:0902889
    as

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    File URL: https://iises.net/proceedings/14th-international-academic-conference-malta/table-of-content/detail?cid=9&iid=17&rid=2889
    File Function: First version, 2014
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    More about this item

    Keywords

    bonds; yield curves; duration;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G19 - Financial Economics - - General Financial Markets - - - Other
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General

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