[Verse 1] A bond's a promise wrapped in paper thin Future payments scheduled, let the math begin Coupons every quarter, principal at end But what's it worth today? That's where we blend [Chorus] Present value, discount back Future cash flows on the track When rates climb high, the price drops low When rates fall down, the price will grow PV equals payment over one plus rate Bond pricing magic, calculate your fate [Verse 2] Interest rates are gravity for bond balloons Higher yields pull prices down like heavy moons Lower rates inflate the worth of promised gold Time decay and discount curves, the story's told [Chorus] Present value, discount back Future cash flows on the track When rates climb high, the price drops low When rates fall down, the price will grow PV equals payment over one plus rate Bond pricing magic, calculate your fate [Bridge] Coupon payment, principal repay Discount each one to today Sum them up and there you'll see What that bond is worth to me Market rates shift like the tide Bond prices surf the other side [Verse 3] Calculator humming, cash flows in a row Each divided by one plus yield, watch values flow Ten years of coupons, face value too Present worth revealed when calculations through [Final Chorus] Present value, discount back Future cash flows on the track When rates climb high, the price drops low When rates fall down, the price will grow PV equals payment over one plus rate Bond pricing wisdom, master this debate [Outro] Inverse relationship, forever true Rates and prices, dancing in taboo
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