Investment Analysis and Portfolio Management

1 Nature of Bonds, Valuation  and Bond Theorem, Term Structure of Interest Rates

•Nature of Bonds:

•Overview:

•Bonds are debt securities issued by governments, municipalities, or corporations to raise capital.

•When an investor buys a bond, they are essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

•Bonds have a fixed maturity date, at which point the issuer repays the principal amount to the bondholder.