[Verse 1] Picture bonds all trading at their face value today That's what par curves show us in their special way When coupon rate equals the yield that's required Par value and price are perfectly aligned [Chorus] Par above spot when the curve slopes up high Par below spot when it's flat or declines Forward rates dancing between the two lines Par curves, spot curves, forward curves combine Remember the pattern, it's there by design Par curves, spot curves, forward curves combine [Verse 2] Spot rates are pure, single payment discount rates Par rates need coupons to balance their weights When longer rates rise above the shorter ones Par curve sits higher, that's how math runs [Chorus] Par above spot when the curve slopes up high Par below spot when it's flat or declines Forward rates dancing between the two lines Par curves, spot curves, forward curves combine Remember the pattern, it's there by design Par curves, spot curves, forward curves combine [Bridge] Forward rates implied between any two points Connect all the curves at their pricing joints When forwards rise steep, par stays more stable Mathematical magic keeps markets able [Verse 3] Bootstrap the spot rates from par bond prices Build up the curve through financial devices Each rate depends on the others before That's the foundation of fixed income's core [Chorus] Par above spot when the curve slopes up high Par below spot when it's flat or declines Forward rates dancing between the two lines Par curves, spot curves, forward curves combine Remember the pattern, it's there by design Par curves, spot curves, forward curves combine [Outro] Three curves together tell the market's story Par curves show us bond pricing glory When yields are calling, remember this song The math will guide you, you can't go wrong
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