9.S: Summary
- Page ID
- 83751
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Congratulations ‒ You Have Finished Chapter 9 ‒ Bond Yields and Valuations
You have reached the end of chapter 9, Bond Yields and Valuations. In this chapter, you have:
- Reviewed the importance of bond yields
- Explored the various types of bond yields and bond yield calculations
- Examined the taxable-equivalent yield calculations for municipal bonds
- Discussed bond yield spreads and the bond yield curve and what an inverted bond yield curve can tell us about the future state of the economy
- Explored bond valuation techniques
- Discussed various bond investment strategies and the technique of bond laddering
You should now be able to:
- Describe the importance of bond yields and the various types of bond yields
- Calculate current yield, yield to maturity, and yield to call
- Calculate the Federal tax-exempt taxable equivalent yield and double tax-exempt taxable equivalent yield for municipal bonds
- Identify wide versus tight (aka narrow) bond yield spreads
- Explain the bond yield curve and what an inverted bond yield curve typically signifies for the near-term future state of the economy
- Calculate bond valuations using a variation of the Discounted Cash Flow Model
- Identify and explain various bond investment strategies and be able to construct a bond ladder investment program
We Are Done with Bonds
And congratulations are also in order since we have finished our journey of studying all the major financial investment alternatives. In our next module, we will take a brief look at hybrid securities such as preferred stock and convertible bonds. They are a very small piece of the investment universe and not very popular with the general investing public, especially preferred stocks. After that, we will attempt to go back to the very beginning of the semester and tie together everything we have learned.