[Verse 1] Picture a bond as a promise to pay Future cash flows on a scheduled day Present value calculations reveal What that future money's worth today is real Discount each coupon, then the face amount At appropriate rates that truly count [Chorus] PV equals cash flows discounted down Spot rates, forward rates spinning around YTM and YTC, yield-to-worst we see Current yield's just annual over price, you and me Bond valuation, it's all about the math Present value guides us down the proper path [Verse 2] Spot rate curve shows pure rates today No coupon bias getting in the way Par curve connects bonds trading at face Forward rates reveal tomorrow's pace Bootstrap method builds the curve we need Strip by strip, each rate we feed [Chorus] PV equals cash flows discounted down Spot rates, forward rates spinning around YTM and YTC, yield-to-worst we see Current yield's just annual over price, you and me Bond valuation, it's all about the math Present value guides us down the proper path [Bridge] When liquidity dries up, matrix pricing saves Comparable bonds show us the waves Arbitrage-free framework keeps things clean No free lunch in this valuation scene Money market yields need conversion care Bond equivalent makes comparisons fair [Verse 3] Yield-to-call when redemption's near Yield-to-worst shows the outcome we fear Three curves dancing in harmony Spot and par and forward, key to see Bootstrapping builds from short to long Each new rate makes the curve more strong [Chorus] PV equals cash flows discounted down Spot rates, forward rates spinning around YTM and YTC, yield-to-worst we see Current yield's just annual over price, you and me Bond valuation, it's all about the math Present value guides us down the proper path [Outro] Discount the future, value today Bond mathematics lights the way From spot to forward, yield to price Present value makes it precise
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