Videos

8. Value a Bond and Calculate Yield to Maturity (YTM)

Download Preston’s 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In this lesson, we began to understand the important terms that truly value a bond. Since most investors will never hold a bond throughout the entire term, understanding how to value the asset becomes very important. As we get into the second course of this website, a thorough understanding of these terms is needed. So, be sure to learn it now and not jump ahead.

We learned that there are two ways to look at the value of a bond, simple interest and compound interest. As an intelligent investor, you’ll really want to focus on understanding compound interest. The term that was really important to understand in this lesson was yield to maturity. This term was really important because it accounted for almost every variable we could consider when determining the true value (or intrinsic value) of the bond. Yield to Maturity estimates the total amount of money you will earn over the entire life of the bond, but it actually accounts for all coupons, interest-on-interest, and gains or losses you’ll sustain from the difference between the price you pay and the par value.

Articles You May Like

Stocks making the biggest moves after hours: H.B. Fuller, KB Home, Lennar and more
Meta’s Version of the Metaverse Is a Joke. But This Emerging VR Tech Holds Great Promise
7 Unknown Biotech Stocks That Could Rocket in 2023
Stocks making the biggest moves midday: Lennar, Coinbase, Array Technologies and more
There Will Be No Soft Landing for SOFI Stock