Stock correct answers standardized ownership claim
Bond correct answers standardized debt claim
interest rate goes up correct answers bond price goes down, yield goes up
bond value = correct answers PV of coupons + PV of face value
bond price = correct answers PV annuity + PV of lump sum. use face value of bond as FV, YTM
as I/Y, years to maturity as N, and coupon rate as PMT
discount bond correct answers bond that trades for less than face value, coupon rate < YTM, par
value < bond price
premium bond correct answers bond that trades for more than face value, coupon rate > YTM,
par value > bond price
par bond correct answers bond that trades at face value, coupon rate = YTM, par value = bond
price
interest rate risk goes up when correct answers longer time to maturity, lower the coupon rate
short term bonds (reinvestment risk) correct answers reinvestment risk goes up
finding YTM correct answers trial and error, PMT and FV are positive, PV is negative
current yield = correct answers annual coupon payment / price