Finance Lab
A formula is not a fact. It is a decision.
Each experiment walks the same six stages: read the formula, understand what it claims, manipulate the variables, observe the sensitivity, solve for a target, then apply it to a decision.
Investments
Bond pricing and yield
P = Σ [C ÷ (1 + y)ᵗ] + F ÷ (1 + y)ⁿ
A bond's price is the present value of its coupons and its face value, discounted at the yield the market demands.
What each symbol means
- Face value
- Amount repaid at maturity.
- Coupon rate
- Annual coupon as a share of face value.
- Yield to maturity
- Return the market demands.
- Years to maturity
- Time until the face value is repaid.