Bond market key

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okay, let's dive into the fascinating world of bond market analysis using python. this tutorial will cover key concepts, calculations, and code examples to equip you with the fundamentals.

*i. what are bonds? a quick recap*

at its core, a bond is a debt security. when you buy a bond, you're essentially lending money to the issuer (a government, corporation, or other entity). in return, the issuer promises to pay you:

*principal (face value or par value):* the amount the issuer will repay at the bond's maturity date.
*coupon payments:* periodic interest payments, usually made semi-annually or annually. the coupon rate is the annual interest rate expressed as a percentage of the face value.
*maturity date:* the date when the principal is repaid.

*ii. key concepts & terminology*

before we jump into calculations, let's define some crucial terms:

*yield to maturity (ytm):* the total return an investor can expect to receive if they hold the bond until maturity. it takes into account the current market price, face value, coupon payments, and time to maturity. it's often considered the most important measure of a bond's return.
*current yield:* the annual coupon payment divided by the current market price of the bond. it provides a snapshot of the immediate return based on the price. it does not account for the difference between the purchase price and the face value received at maturity.
*coupon rate:* the annual interest rate stated on the bond certificate, expressed as a percentage of the face value.
*clean price:* the price of a bond excluding any accrued interest since the last coupon payment.
*dirty price (invoice price):* the price of a bond including accrued interest. this is the price an investor typically pays when buying a bond between coupon payment dates. dirty price = clean price + accrued interest.
*accrued interest:* the interest that has accumulated on a bond since the last co ...

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